World food price index rises in June, first increase in 2020: UN

World food prices rose in June to post their first increase of 2020 and mark a slight rebound after the sharp falls triggered by the coronavirus pandemic, the United Nations food agency said on Thursday.

The Food and Agriculture Organization (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat, and sugar, averaged 93.2 points last month, up 2.4% in May.

FAO said it had rebased here all its indices, shifting the base period to 2014-16 from a previous 2002-04. “As trade patterns evolve, it is imperative to update the base period to ensure that the weighted basket remains relevant,” it said.

Amid continued market uncertainty, the prices of vegetable oils, sugar, and dairy products rebounded to multi-month highs following sharp declines in May, while in the cereals and meat indices, most prices remained under downward pressure.

The vegetable oil price index jumped 11.3% in June, reversing four consecutive months of falls. The rebound mainly reflected higher palm oil values, which were lifted by recovering global import demand and worries over possible production problems amid prolonged migrant labour shortages tied to the coronavirus outbreak.

The sugar index rose 10.6% month-on-month, partly shunted higher by reports of bottlenecks in Brazilian ports due to the measures introduced to contain the spread of the virus, FAO said.

The dairy index climbed 4.0% but all its components remained below where they had been before the pandemic swept the world.

The cereal price index slipped 0.6% from May, with downward pressure on wheat prices intensifying last month, due partly to improved production prospects in a number of major exporting countries, especially in the Black Sea region. By contrast, maize prices were firmer in June, supported by some recovery in demand and adverse growing conditions in the United States, FAO said.

The meat price index also slipped 0.6% on the month, with quotations for poultry and bovine meats easing because of increased export availabilities in major producing regions.

FAO also revised up its forecast for the 2020 cereal season by some 9.3 million tonnes, foreseeing global output of almost 2.790 billion tonnes — a 3.0% increase in 2019’s record harvest. The bulk of the monthly increase reflected an upward revision to Australia’s wheat production estimates.

The forecast for world cereal utilisation in 2020/21 hit 2.735 billion tonnes, just over 43 million tonnes above the 2019/20 level. FAO’s latest forecast for world trade in cereals in 2020/21 stands at 435.0 million tonnes, up 2.1% from 2019/20 levels and representing a new record high.

FAO’s estimate for world cereal stocks by the close of seasons in 2021 rose by 2 million tonnes from the previous month to 929 million tonnes — a 6.0% increase year-on-year.