The Global Food Price Index, prepared by the United Nations Food and Agriculture Organization (FAO), increased by 1.4 percent month-on-month to 175.2 points in June. The index increased by 7 percent comparing to the same period of the previous year.
The FAO Food Price Index is determined by monitoring the prices and trade of five major foodstuffs, which are made up of cereal, vegetable oil, dairy products, meat and sugar in international markets. The FAO Grain Price Index rose 4.2 percent in June, driven by turbulent high protein wheat because of the deteriorating crop conditions in the US. On the other hand, Egyptian prices fell due to crops in record level in South America.
The prices of meat and dairy products increased while the prices of vegetable fat and sugar decreased in the products that make up the FAO Price Index. The grain prices index rose by 4.2 percent to 154.3 points while the oil price index dropped by 6.5 percent to 162.1 pounds. The milk prices index rose by 15.9 percent to a level of 209.0 points. Although milk prices are still 24 percent lower at the peak of February 2017, they are heading towards the lost value in 3 years.
The meat prices index increased by 3.2 percent to 175.2 points while the sugar prices index declined by 13.4 percent to 197.3 points.
According to FAO’s latest Grain Supply and Demand Report, the global grain supply is expected to remain abundant next year, despite tightening in high protein wheat conditions. FAO 2017 dropped its June forecast for global wheat production, but raised its forecast for corn and rice.
Global cereal production is likely to reach 2 593 million tons this year; which points to 0.6 percent below 2016. Global cereal stocks are expected to expand further, breaking a new record at 704 million tons.