Global Food Prices Steady in June Despite Mixed Trends Across Commodities, FAO Reports

The Food and Agriculture Organization (FAO) of the United Nations announced on July 5, 2024 that global food commodity prices remained stable in June. This steadiness comes despite varied movements in the prices of different food categories. The FAO Food Price Index, which monitors monthly changes in international prices of widely traded food commodities, held steady at 120.6 points in June, matching the revised figure for May. This index is currently 2.1 percent lower than its value a year ago and 24.8 percent below its peak in March 2022.

The FAO Cereal Price Index saw a 3.0 percent decline in June compared to May. This decrease was driven by lower quotations for coarse grains, wheat, and rice, influenced by improved production outlooks in major exporting countries. Enhanced production prospects in regions like Argentina, Brazil, Türkiye, and Ukraine contributed to the decline. Conversely, Indonesia, Pakistan, and several Southern African countries experienced downgraded forecasts, affecting the overall cereal production scenario.

In contrast to cereals, the FAO Vegetable Oil Price Index rose by 3.1 percent in June. This increase was fueled by a revival in global import demand for palm oil and strong demand from the biofuel sector in the Americas for soy and sunflower oils.

The FAO Sugar Price Index also experienced an increase, rising by 1.9 percent after three consecutive monthly declines. Concerns about adverse weather conditions and monsoons impacting production in Brazil and India played a significant role in this uptick.

The FAO Dairy Price Index increased by 1.2 percent, with international butter quotations reaching a 24-month high. This was due to increased global demand for near-term deliveries, strong retail sales, seasonally falling milk deliveries in Western Europe, and low inventories in Oceania.

The FAO Meat Price Index remained virtually unchanged in June. Slight increases in the prices of ovine, pig, and bovine meats nearly offset a decline in international poultry meat prices, driven by supply factors.

The FAO has updated its forecast for global cereal production in 2024, predicting a record high of 2,854 million tonnes. This optimistic projection is based on improved harvest outlooks for maize in Argentina, Brazil, Türkiye, and Ukraine, which counterbalance downgrades in Indonesia, Pakistan, and Southern African countries. The wheat production forecast has been revised upwards due to better prospects in Asia, especially Pakistan, expected to outweigh a decline in the Russian Federation caused by adverse weather.

Despite the positive production forecasts, food insecurity remains a pressing issue in conflict-affected regions. The FAO's Crop Prospects and Food Situation report highlighted severe levels of acute food insecurity in Yemen, Gaza Strip, and Sudan. Nearly 4.6 million people in government-controlled areas of Yemen are facing high levels of acute food insecurity.

The report also indicated that while cereal production in Low-Income Food Deficit Countries is expected to increase in 2024, growth remains uneven. Particularly concerning is the projected nearly 20 percent drop in cereal production in Southern Africa due to widespread hot and dry conditions. This subregion's import requirements are projected to more than double the past five-year average, posing significant challenges.

While the global food price index remained stable in June, the FAO report highlights a complex scenario of varying trends across different commodities and ongoing food insecurity in conflict-affected regions. The mixed outlook highlights the need for continued monitoring and proactive measures to address food security challenges worldwide.