For Third Straight Month, Global Prices of Food Drop in June

By Adedapo Adesanya

For the third consecutive month, the global prices of food fell in June 2022, according to the Food and Agricultural Organisation (FAO).

In the monthly report released by the world’s food watcher on Friday, the FAO Food Price Index (FFPI) averaged 154.2 points in June 2022, down 3.7 points (2.3 per cent) from May, marking the third consecutive monthly decline.

Despite this, it is still 29.0 points (23.1 per cent) above its value a year ago.

The drop in June reflected declines in the international prices of vegetable oils, cereals and sugar, while dairy and meat prices increased.

The FAO Cereal Price Index averaged 166.3 points in June, down 7.2 points (4.1 per cent) from May, but still 36.0 points (27.6 per cent) above its June 2021 value.

After reaching a near-record level in May, international wheat prices fell by 5.7 per cent in June, but are still up 48.5 per cent from their values last year.

The decline in June was driven by seasonal availability from new harvests in the northern hemisphere, improved crop conditions in some major producers, including Canada, higher production prospects in the Russian Federation, and slower global import demand. International coarse grain prices fell by 4.1 per cent in June but were still 18.4 per cent above their year-earlier values.

Downward pressure stemming from seasonal availabilities in Argentina and Brazil, where maize harvests progressed quickly, and improved crop conditions in the United States of America underpinned a 3.5-per cent decline in world maize prices in June. Concerns over demand prospects amidst signs of an economic slowdown added to the downward pressure.

Among other coarse grains, sorghum and barley prices fell in June by 4.1 per cent and 6.1 per cent, respectively, in tandem with lower maize and wheat quotations. Strong demand for Indica and basmati rice, coupled with thinning basmati availabilities, kept international rice prices on the rise in June.

The FAO Vegetable Oil Price Index averaged 211.8 points in June, down 17.4 points (7.6 per cent) month-on-month, driven by lower prices across palm, sunflower, soy and rapeseed oils. International palm oil prices declined for the third consecutive month in June, as a seasonally rising output of major producing countries coincided with prospects of increasing export supplies from Indonesia amid large domestic inventories.

In the meantime, world sunflower and soy oil price quotations also declined, tied to subdued global import demand in the wake of rising costs observed in recent months. In the case of rapeseed oil, besides demand rationing, international prices weakened on the imminent arrival of new crop supplies.

The FAO Dairy Price Index averaged 149.8 points in June, up 5.9 points (4.1 per cent) from May and as much as 29.9 points (24.9 per cent) above its June 2021 value.

In June, international prices of all dairy products increased. Quotations for cheese rose the most, underpinned by a surge in import demand for spot supplies amid market concerns over supply availabilities later in the year, as the early summer heat wave further weighed on already low milk output in Europe.

World milk powder prices increased on strong import demand, persistent global supply tightness and low inventory levels. International butter prices rebounded as market uncertainty over milk deliveries in the months ahead bolstered foreign purchases as well as internal demand in Europe.

The FAO Meat Price Index averaged 124.7 points in June, up 2.1 points (1.7 per cent) from May, setting a new record high and exceeding by 14.0 points (12.7 per cent) its June 2021 value.

World prices across all meat types increased, with poultry quotations rising sharply, reaching an all-time high, underpinned by the continued tight global supply conditions impacted by the war in Ukraine and the Avian Influenza outbreaks in the Northern Hemisphere.

Bovine meat prices edged up, as China lifted its import restrictions for purchases from Brazil. Meanwhile, pig meat prices recovered slightly on higher imports by several leading importers, amid continued low purchases by China. International ovine meat prices also bounced back on lower exportable volumes from New Zealand, notwithstanding subdued demand from Northern Asia.

The FAO Sugar Price Index averaged 117.3 points in June, down 3.1 points (2.6 per cent) from May, marking the second consecutive monthly decline and reaching its lowest level since February.

The slowdown in the global economic growth weighed on international sugar demand and price quotations in June. On the supply side, good global availability prospects continued to exert downward pressure on prices.

The weakening of the Brazilian Real against the US Dollar and lower ethanol prices in Brazil prompted producers to step up sugar production, contributing to higher supplies and lower world sugar prices in June.

However, uncertainties over the current season’s outturn in Brazil prevented more substantial price declines.