Food Price Index Edged Lower
The Food and Agriculture Organization of the United Nations (FAO) released its global food price index data for June. The index fell 0.3 percent month-on-month to 130.3 points as declines in sugar, cereals and dairy products offset rises in vegetable oil and meat prices.
On an annual basis, the index rose 2.2 percent.
Decline in Cereal Prices Continued
The FAO Cereal Price Index fell 3.5 percent in June from the previous month. On an annual basis, it remained 2.9 percent higher.
The 4.4 percent drop in global wheat prices was driven by the acceleration of the harvest in the Black Sea basin and a strengthening supply outlook. Expectations of increased trade flows through the Strait of Hormuz also pulled prices lower.
Vegetable Oil Index Rose
The Vegetable Oil Index rose 3.8 percent month-on-month to 192 points. On an annual basis, it recorded a 23.3 percent increase. Although soy oil prices eased, a sharp rise in palm oil lifted the index.
Meat Prices Hit Record
The Meat Price Index reached 131 points in June, up 0.4 percent month-on-month and 4 percent year-on-year, setting a new record. The rise was mainly driven by higher international poultry meat prices.
Dairy and Sugar Decline
The Dairy Price Index fell 1.5 percent month-on-month and 24.5 percent year-on-year to 117.4 points. While prices declined for all dairy products, underlying market conditions continued to vary across product groups.
The Sugar Price Index declined 5.7 percent month-on-month and 13.3 percent year-on-year to 89.7 points. The third consecutive drop in domestic ethanol prices in Brazil led to more sugarcane being diverted to sugar production, contributing to the fall in international sugar prices.
Cereal Production Outlook
FAO expects global cereal production this year to reach 2,983 million tonnes, the second highest level on record. This would be 1.9 percent below last year's record. Stronger harvest prospects in Argentina, Brazil, China and Zambia lifted production estimates.
The forecast for world cereal utilization in the 2026/27 period was lowered to 2,961 million tonnes due to an expected decline in wheat use.
Global wheat production is forecast to fall 4.3 percent to 806.5 million tonnes. Production in Australia dropped below the five-year average due to the impact of El Niño. World rice production is expected to decline by 1.8 percent from the 2025-26 record.
41 Countries Await Food Aid
According to FAO, 41 countries and territories worldwide require external food assistance. Of these, 31 are in Africa. Conflict and insecurity remain the main drivers of the most severe levels of acute food insecurity. El Niño-related weather events and high input prices are constraining agricultural production in East and West Africa.
Total cereal production in the 39 low-income food-deficit countries is forecast to rise 1.4 percent to 129 million tonnes in the 2026/27 season. However, their import requirements are expected to increase by 2 percent to around 48 million tonnes.
