FAO Food Price Index: Global food prices fall for the first time in 12 months

08 Jul 2021 --- Global food commodity prices fell last month for the first time in 12 months, according to the FAO Food Price Index. The decline in June marked the first drop in the Index following twelve consecutive monthly increases. It fell by 2.5 percent.

The FAO Food Price Index averaged 124.6 points in June, down 2.5 percent from May but still 33.9 percent higher than its level in the same period last year. 

The drop in June reflected declines in the prices of vegetable oils, cereals and, though more moderately, dairy products. This decrease more than offset generally higher meat and sugar quotations.

Sizable month-on-month drop
The FAO Vegetable Oil Price Index fell by 9.8 percent in the month, marking a four-month low. The sizable 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 percent from May but remained 33.8 percent higher than its value in June 2020. 

World cereal inventories are expected to rise for the first time since 2017/18.International maize prices dropped by 5.0 percent, led by falling prices in Argentina due to increased supplies from recent harvests resulting from higher than expected yields.

The FAO Dairy Price Index fell by 1 percent to 119.9 points in June. 

International quotations for all dairy products in the index fell, with butter registering the highest drop, underpinned by a fast decline in global import demand and a slight increase in inventories, especially in Europe. 

Sugar and meat prices rise
The FAO Sugar Price Index moved against the overall food price trend, rising by 0.9 percent month-on-month, marking the third consecutive monthly increase and reaching a new multi-year high. 

The FAO Meat Price Index also rose by 2.1 percent over the month to June, continuing the increases for the ninth consecutive month and placing the index 15.6 percent above its value in the corresponding month last year, but still, 8.0 percent below its peak reached in August 2014. 

Wheat prices decline 
International wheat prices declined slightly by 0.8 percent in June, with a favorable global outlook supported by improved production prospects in many key producers.

According to the latest Cereal Supply and Demand Brief, FAO’s forecast for global cereal production in 2021 has been lowered marginally to 2,817 million metric tons. However, the figure remains 1.7 percent higher – by 47.8 million metric tons – than in 2020, which would mark a new record high.

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 metric tons, up 2.4 percent 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.The drop in June reflected declines in the prices of vegetable oils, cereals and dairy products.

FAO’s latest forecast for world trade in cereals in 2021/22 has been raised slightly since June. It now stands at a record 472 million metric tons, driven primarily by potential large maize purchases from China, taking global maize trade to record levels.

Food insecurity and COVID-19
The effects of the pandemic, primarily in terms of income losses, have exacerbated vulnerabilities and heightened existing levels of food insecurity, according to the latest Crop Prospects and Food Situation Report. 

The FAO assesses that globally 45 countries, including 34 in Africa, 9 in Asia and two in Latin America and the Caribbean, need external assistance for food. Conflicts and climate-related shocks continue to underpin the high levels of severe food insecurity in these regions. 

Edited by Elizabeth Green