Adedapo Adesanya
By Adedapo Adesanya
Global food commodity prices fell in June for the first time in 12 months, according to a benchmark report released last week by the United Nations’ Food and Agriculture Organisation (FAO).
According to the Rome-based agency, the FAO Food Price Index averaged 124.6 points in June 2021, down 2.5 per cent from May. The decline in June marked the first drop in the index following 12 consecutive monthly increases.
However, this was still 33.9 per cent higher than its level in the same period last year.
The FAO Food Price Index tracks changes in the international prices of the most globally traded food commodities.
The drop in June reflected declines in the prices of vegetable oils, cereals and, though more moderately, dairy products, which more than offset generally higher meat and sugar quotations.
The FAO Vegetable Oil Price Index fell by 9.8 per cent in the month, marking a four-month low. The sizeable month-on-month drop mainly reflects lower international prices of palm, soy and sunflower oils.
The FAO Cereal Price Index fell by a more moderate 2.6 per cent from May but remained 33.8 per cent higher than its value in June 2020.
International maize prices dropped by 5.0 per cent, led by falling prices in Argentina due to increased supplies from recent harvests as a result of higher-than-earlier expected yields. International wheat prices declined slightly by 0.8 per cent in June, with a favourable global outlook supported by improved production prospects in many key producers outweighing most of the upward pressure from dry conditions affecting crops in North America.
The FAO Dairy Price Index fell by 1 per cent to 119.9 points in June. International quotations for all dairy products represented in the index fell, with butter registering the highest drop. This happened as a result of a fast decline in global import demand and a slight increase in inventories, especially in Europe.
The FAO Sugar Price Index moved against the overall food price trend, rising by 0.9 per cent month-on-month, marking the third consecutive monthly increase and reaching a new multi-year high. Uncertainties over the impact of unfavourable weather conditions on crop yields in Brazil, the world’s largest sugar exporter, exerted upward pressure on prices.
The FAO Meat Price Index also rose by 2.1 per cent over the month to June, continuing the increases for the ninth consecutive month and placing the index 15.6 per cent above its value in the corresponding month last year, but still 8.0 per cent below its peak reached in August 2014.
FAO’s forecast for global cereal production in 2021 has been lowered marginally to 2. 8 billion tonnes, according to the latest Cereal Supply and Demand Brief released today. However, the figure remains 1.7 per cent, or 47.8 million tonnes, higher than in 2020, which would mark a new record high.
Forecasts for world coarse grains production have been cut back to 1.5 billion tonnes, 3 million tonnes below last month’s expectation. A large cut to the Brazilian maize production forecast accounts for the bulk of the expected global decline, with prolonged periods of dry weather dragging down yield expectations.
World wheat output in 2021 has been lowered by 1 million tonnes to 784.7 million tonnes, still 1.2 per cent higher year-on-year, as the dry weather conditions in the Near East cut back yield prospects.
By contrast, the forecast of global rice production in 2021 has undergone a slight upward adjustment since June, with a record of 519.5 million tonnes of rice now expected to be harvested in 2021, up 1.0 per cent from 2020.
World cereal utilization in 2021/22 has been lowered by 15 million tonnes from the previous month to 2.8 billion tonnes, nevertheless still 1.5 per cent higher than in 2020/21. The downward revision comes largely from lower-than-earlier-anticipated utilization of maize in China for animal feed.
World cereal stocks by the close of seasons in 2021/22 are now forecast to rise above their opening levels for the first time since 2017/18, following a sharp upward revision to 836 million tonnes, up 2.4 per cent from last year’s relatively tight level. Higher maize stocks foreseen in China account for the bulk of this month’s upward revision to world cereal inventories.
FAO’s latest forecast for world trade in cereals in 2021/22 has been raised slightly since June and now stands at a record 472 million tonnes, driven primarily by likely large maize purchases from China taking global maize trade to record levels.
