The latest report from the Food and Agriculture Organization of the United Nations (FAO) reveals a balanced global benchmark for food commodity prices in June. Despite a decrease in cereal prices, this was offset by increases in vegetable oils, sugar, and dairy products. The FAO also anticipates that global cereal production will reach an all-time high in 2024.
The FAO Food Price Index, which monitors monthly changes in the international prices of various globally traded food items, averaged 120.6 points in June, staying consistent with the revised figure for May. This index is now 2.1% lower than its value from a year ago and 24.8% lower than its peak in March 2022.
In June, the FAO Cereal Price Index saw a significant 3.0% decrease from May, with quotations for coarse grains, wheat, and rice all down due partly to better production prospects in major exporting countries. On the other hand, the FAO Vegetable Oil Price Index rose by 3.1% from May due to an increased demand for palm oil globally and strong demand from the biofuel sector in the Americas for soy and sunflower oils. The FAO Sugar Price Index also increased by 1.9% from May, after three consecutive monthly declines, mainly due to concerns about adverse weather and monsoons impacting production in Brazil and India.
The FAO Dairy Price Index rose by 1.2%, with international quotations for butter reaching a 24-month high on the back of increased global demand for near-term deliveries amidst retail solid sales, seasonally falling milk deliveries in Western Europe and low inventory in Oceania. The FAO Meat Price Index was virtually unchanged in June, as slight increases in the world prices of ovine, pig and bovine meats nearly offset a supply-led decline in international poultry meat prices.
FAO also updated its forecast for global cereal production in 2024, pegging it at 2 854 million tonnes, a new all-time high. The Cereal Supply and Demand Brief, also issued by FAO today, attributed its raised projections to a better harvest outlook for maise in Argentina and Brazil as well as Turkey and Ukraine, which will offset downgrades to the outlook for Indonesia, Pakistan and several Southern African countries. The wheat production forecast has also been raised based on better prospects in Asia, notably Pakistan, which should outpace an expected decline in the Russian Federation due to inclement weather in major wheat-producing areas earlier in the season. Global rice production is projected to reach a record 535.1 million tonnes. The report forecasts the total utilisation of the world cereal in 2024/25 to rise to 2 856 million tonnes, up 0.5% from the previous year, led by rice and coarse grains. It also forecasts the world cereal stocks to expand by 1.3% in 2025, leaving the global cereal stocks-to-use ratio in 2024/25 nearly unchanged at 30.8%. FAO’s forecast for international trade in total cereals remains unchanged at 481 million tonnes, representing a 3.0% decline from 2023/24.
Conflicts and droughts increase food insecurity
The latest report from FAO’s Global Information and Early Warning System (GIEWS) shows that conflicts have caused severe food insecurity, particularly in Yemen, where nearly 4.6 million people in government-controlled areas face high levels of acute food insecurity. The Gaza Strip and Sudan are also at risk of famine. Due to hot and dry conditions, Southern Africa is projected to experience a 20% drop in cereal production. Import requirements for the subregion are projected to exceed the past five-year average, assuming normal consumption levels are maintained. Zambia, usually a net exporter of maise, is forecast to import nearly one million tonnes in 2024. Although global maise supplies are expected to be ample, most are yellow maise, while the worldwide supply of the white maise, a staple food in Southern Africa, is tight, as noted in the report.
