FAO Food Price Index falls for the first time in 12 months

GLOBAL – The FAO Food Price Index (FFPI) which is a measure of the monthly change in international prices of a basket of food commodities averaged 124.6 points in June 2021, down 3.2 points (2.5 percent) from May. 

The fall has been attributed to declines in the prices of vegetable oils, cereals, and, to a lesser degree, dairy prices, which more than offset generally higher meat and sugar quotations. 

Maize prices dropped by 5.0 percent in June as a result of increased supplies from recent harvests in Argentina, Brazil, and the United States. 

Among other coarse grains, international barley and sorghum prices also softened in June, falling by 2.2 percent and 4.9 percent, respectively.

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

All these cereal price declines resulted in the FAO Cereal Price Index averaging 129.4 points in June, down 3.5 points (2.6 percent) from May. 

Vegetable and Dairy Price Indexes down

Lower prices of palm, soy, and sunflower oils pushed the FAO vegetable oils price index 17.2 points (or 9.8 percent) down to 157.5 points in June. 

The FAO Dairy Price Index fell by 1 percent to 119.9 points in June with butter registering the highest drop in prices underpinned by a fast decline in global import demand and a slight increase in inventories, especially in Europe. 

Whole milk powder prices also declined on reduced purchases by China and lower demand for spot supplies. 

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Meat and Sugar Price index surge

The FAO Meat Price Index also rose by 2.1 percent over the month to June, continuing the increases for the ninth consecutive month and placing the index 15.6 percent 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 moved against the overall food price trend, rising by 0.9 percent month-on-month, marking the third consecutive monthly increase and reaching a new multi-year high. 

 The upward pressure on sugar prices has been attributed to uncertainties over the impact of unfavorable weather conditions on crop yields in Brazil, the world’s largest sugar exporter. 

According to FAO, this is the first time the index dropped in 12 months. The UN food agency however noted that despite the drop, the June Index was still 31.5 points (33.9 percent) higher than its level in the same period last year. 

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