FAO Food Price Index steady in June

Global food prices declined marginally in June, as lower prices of dairy products and vegetable oils more than offset a significant jump in maize quotations, and are now very close to their level of a year ago, according to a report by the Food and Agriculture Organization of the United Nations released today.

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 173 points in June, down 0.3% from May.

The FAO Cereal Price Index rose 6.7% in June, as expectations of much tighter maize export suppliers from the United States of America pushed quotations up for maize and, as a spillover, also for wheat. Rice prices were broadly stable.

The FAO Sugar Price Index in June was up 4.2% from the previous month, strongly influenced by the Brazilian Real’s appreciation against the US dollar.

By contrast, the FAO Dairy Price Index decreased by 11.9%, marking its first decline in five months, led by frail demand for cheese and butter.

The FAO Vegetable Oil Price Index declined 1.6% during the month, with palm oil and soy oil prices both down on the back of sluggish global import demand and expectations of ample global supplies, respectively.

The FAO Meat Price Index increased by 1.5% from its revised value for May, driven by strong import demand from East Asia for ovine, pig and poultry meats to offset domestic production shortfalls due to the spread of African Swine Fever.

New cereals forecasts

FAO also released the Cereal Supply and Demand Brief today, keeping its forecast for worldwide production in 2019 unchanged from June at 2 685 million tons. That would mark a 1.2% increase from 2018, with the bulk of this year’s growth expected to come from higher production of wheat.

Worldwide wheat production should rise by 5.6% in 2019 to reach nearly 771 million tons, buoyed by record output in India. By contrast, global production of coarse grains is expected to decline to 1 398 million tons this year, due to weak prospects in parts of Africa, China, and especially the United States of America. World rice output is forecast at 516 million tons, close to the high level of 2018.

World cereal utilisation in 2019/20 is expected to exceed 2,708 million tons, a 1.0% increase from the previous year, with wheat and rice utilization growing faster than that of maize.

FAO lowered its forecast for world cereal stocks at the close of the 2020 seasons to 828 million tons, some 3.2% below their opening level. The decline is driven by an expected 12.4% contraction in maize inventories, with most of the reduction concentrated in China and the United States. Global wheat stocks are set to expand by 4.5%. Overall, the stock-to-use ratio for cereals should remain at a relatively high level of 29.6% for the 2019/20 period.

World trade in cereals is now expected to rise by 2.0% to 415 million tons, with wheat trade expanding at nearly twice the pace.