Sharply lower prices for vegetable oils, down nearly 10 percent in a month, contributed to the first decline in the Food Price Index since last May, said the UN Food and Agriculture Organization on Thursday. The index, based on average prices for five commodity groups, fell by 2.5 percent in June, although it was still about one-third higher than a year ago.
Vegetable oil prices tumbled to a four-month low on the combination of a lack of fresh demand and the prospect of large harvests in major nations. Lower corn, wheat, sorghum, and barley prices pulled down the index for cereal grains. The dairy index fell 1.2 percent, the first decline in a year, due to weaker prices for cheese and dry milk. Meat and sugar prices edged upward. Sugar rose on concerns that drought would reduce the crop in Brazil.
The pandemic and the accompanying economic slowdown initially drove down most commodity prices. They surged after supplies tightened, later aided by stirrings of economic recovery. The FAO said the income losses of the pandemic “have exacerbated vulnerabilities and heightened existing levels of food insecurity.” Some 45 countries, mostly in Africa and Asia, need food aid, it said, “with conflicts and climate-related shocks continuing to underpin the high levels of severe food insecurity.”
Global grain production is headed for a record 2.817 billion tonnes, up nearly 2 percent from last year, said the FAO. World wheat and rice crops will be the largest yet. Dry weather has cut into corn production in Brazil.