Food Prices in June at Lowest Level in Over Two Years

Food prices fell in June, dropping to their lowest level in over two years due to the decline in sugar, vegetable oils, and grain prices, reported the UN’s Food and Agriculture Organization (FAO) on Friday.

The FAO’s index of prices for a basket of staple food products fell by 1.4 percent in June compared to the revised value in May, averaging 122.3 points, which is its lowest value since April 2021.

This also means that it was 23.4 percent lower than in the record month of March 2022, at the onset of the Russia-Ukraine war.

Sugar saw the largest price drop in June, falling by 3.2 percent compared to May, which the FAO attributes to good initial results from the sugarcane harvest in Brazil and weak import demand.

Vegetable oils and grains also saw significant price reductions, by 2.4 and 2.1 percent respectively compared to May, the UN agency determined.

Vegetable oil prices have dropped to their lowest level since November 2020, as the decline in palm and sunflower oil prices outweighed the increase in soybean and rapeseed oil prices.

The drop in grain prices reflects the decrease in most products, including wheat, rice, corn, barley, and sorghum.

The dairy products index shows a price decrease of 0.8 percent compared to May, while the meat index indicates stagnation.

Lower Wheat Production

In a separate report on supply and demand in the grain markets, the FAO more or less confirmed its estimate of this year’s production, calculating that it should reach 2.819 billion tons. This would mean an increase of 1.1 percent compared to 2022.

Wheat production is expected to decrease by 2.3 percent in the 2023/2024 season compared to the record season just ending.

Wheat production forecasts in the EU have been raised, where yield expectations have slightly improved due to generally favorable weather conditions. The exception is the detrimental impact of drought on the Iberian Peninsula, the FAO points out.

Production of coarse grains, including corn, is expected to increase by 2.9 percent, while rice production is expected to rise by 1.2 percent.

Grain consumption is expected to remain at the level of the recently concluded 2022/2023 season in the new season that began in July, the FAO estimates, adding that they expect increased demand primarily for corn for animal feed production.

Grain stocks are expected to be 2.3 percent higher at the end of the new season than at its beginning, reaching 878 million tons.

Grain trade is expected to remain at the level of the recently concluded season, with a reduced volume of wheat trade compared to the record in 2022/2023, the FAO estimates.