U.N. agency: Food prices fall in June, cereal output seen slightly higher

World food prices declined for a third consecutive month in June, but remained near record levels set in March, the United Nations' food agency said on Friday.

The Food and Agriculture Organization's (FAO) food price index, which tracks the most globally traded food commodities, averaged 154.2 points last month versus a revised 157.9 for May. The May figure was previously put at 157.4 points.

Despite the monthly decline, the June index remained 23.1% above the previous year. This has happened due to the impact of the Russian invasion of Ukraine, concerns about adverse weather conditions, high global demand and high production and transportation costs.

"The factors that drove global prices high in the first place are still at play," said FAO Chief Economist Maximo Torero Cullen.

In separate estimates of cereal supply and demand, FAO increased its forecast for global cereal production in 2022 to 2.792 billion tonnes, compared to 2.784 billion previously. This is still 0.6% below global production in 2021.

The FAO cereal index fell 4.1% compared to May, but was still up 27.6% year-on-year. FAO said June's decline was driven by the seasonal availability from new harvests in the northern hemisphere, improved crop conditions in some major producing countries, and higher production prospects in Russia.

The vegetable oil price index fell 7.6% over one month, reflecting the seasonal increase in production in the main producer countries and the prospects for increased supplies from Indonesia.

The sugar index declined 2.6% from May as slower global economic growth weighed on demand.?

The meat index increased 1.7% in June, setting a new record, while the dairy index jumped 4.1% over one month. World milk powder prices increased due to strong import demand and persistent tight world supply.

FAO said its forecast increase in cereal production was largely due to an upward revision of the coarse grain production estimate of 6.4 million tonnes.

The forecast for global cereal utilization in 2022/23 was also increased from 9.2 million tonnes to 2.797 billion tonnes. However, this still represented a 0.1% dip on 2021/22 levels, mostly reflecting expectations of lower feed use.

FAO estimated that world cereal stocks at the close of seasons in 2023 would total 854 million tonnes, up 7.6 million tonnes from last month's forecast, but nonetheless a year-on-year decline of 0.6%.

Reference:

Reuters. (2022, July 8). Food prices fall in June, cereal output seen slightly higher, U.N. agency says. Retrieved from https://www.reuters.com/markets/europe/food-prices-fall-june-cereal-output-seen-slightly-higher-un-agency-says-2022-07-08/