Global food prices record first decline in 12 years

The Food and Agriculture (FAO) Food Price Index, which is a gauge of the monthly change in global prices of the most commonly traded food commodities, retreated from a nine-year high to mark its first drop since May 2020, recording an average of 124.6 points for the month of June 2021, down 3.2 points (2.5 per cent) compared to May, the month prior.

The dip, according to the report,is dominated by a fall in the prices of vegetable oils, cereals, and, to a lesser degree, dairy prices, which more than offset generally higher meat and sugar quotations.

A reduced cost of palm, soy, and sunflower oils saw the FAO vegetable oil price index slump 17.2 points (9.8 per cent) down to 157.5 points. The FAO dairy price index followed a similar trend, falling 1 per cent to stand at 119.9 points,down 1.0 per cent with butter registering the highest drop in prices, attributed to a fast decline in global import demand and a slight increase in inventories, especially in Europe. The report further showed that whole milk powder prices dropped on reduced purchases by China and lower demand for spot supplies, while global quotations for cheese and skim milk powder lowered on reduced global import demand amid slightly higher export supplies from major producing regions.

Grain prices also saw significant reductions with maize recording the highest drop at 5.0 per cent. The FAO attributed this to increased supplies from recent harvests in Argentina, Brazil, and the United States. Among other coarse grains, international barley and sorghum prices also eased in June, falling by 2.2 per cent and 4.9 per cent, respectively.

International wheat prices softened slightly by 0.8 per cent but remained above last year’s values by over 31 per cent while price of rice also fell in June, hitting fifteen-month lows, as high freight costs and container shortages continued to limit export sales.

The decrease in prices of cereal resulted in the FAO Cereal Price Index averaging 129.4 points in June, down 3.5 points (2.6 per cent) from May.

On the other hand, the FAO Meat Price Index rose by 2.1 per cent over the month to June, maintaining its surge for the ninth consecutive month to place the index 15.6 per cent above its value in the corresponding month last year. According to the FAO, a firm global import demand particularly from some East Asian countries and tightening export supplies kept June prices high for all meat represented in the index.

The FAO Sugar Price Index also moved against the overall food price trend, rising by 0.9 per cent monthon-month to mark its third consecutive monthly increase and a new multi-year high of 107.7 points. The upward pressure on sugar prices was attributed to uncertainties over the impact of adverse weather conditions on crop yields in Brazil, the world’s largest sugar exporter.

Despite recording its first food price index decline in 12 months, the United Nations food agency noted that the June Index was still 31.5 points (33.9 per cent) higher than its level in the same period last year. The report further noted that crop prices are hinging on the weather in months ahead across major production regions to determine whether harvests will