Surging grain, sugar, meat and dairy prices worldwide drove up the FAO Food Price Index 4.2 percent, the steepest one-month increase in the index in four years. June was the fifth month in a row for an increase in the index, which tracks the average international price of a basket of food commodities, now at its highest reading since last July.
Sugar prices rose nearly 15 percent because of heavy rains that slowed the harvest and reduced yields in Brazil, the world’s largest grower and exporter of the sweetener, said FAO. Dairy products were up roughly 8 percent, reflecting a slow-down in milk production in Europe and uncertainties about output in the Pacific region. “The June increase only represented a recovery from low prices prevailing in the preceding three months,” said FAO.
Meat prices rose for the third month in a row, with pork and mutton showing the largest increases. Prices of cereal grains rose moderately, due to a darkening outlook for corn exports from Brazil. Vegetable oils were the only sector to show a decrease, down nearly 1 percent on a seasonal recovery in palm oil production in Indonesia and Malaysia.
For the first time in four years, world grain consumption will exceed the harvest, allowing a small draw-down in stocks that grew by more than 100 million tonnes since 2012/13, said FAO in the companion Cereal Supply and Demand Brief. The stocks-to-use ratio, a gauge of the adequacy of supplies, was forecast by FAO for 24 percent at the end of 2016/17, an ample level and “well above the historic low of 20.5 percent registered in 2007/08,” when food prices soared worldwide.