816. June 2023 World Food Price Index

The United Nations Food and Agriculture Organization (FAO) released its world Food Price Index on July 7. The June 2023 reading averaged 122.3 points, down 1.7 points (1.4%) from the previous month and 37.4 points (23.4%) below the all-time high reached in March 2022. June's decline reflected sharp declines in sugar, vegetable oil, cereal and dairy prices, while meat prices were virtually unchanged.

Cereal prices were 126.6 in June, down 2.7 points (2.1%) from May and down 39.7 points (23.9%) from a year ago. While most cereal price indexes declined, maize fell for the fifth consecutive month, reflecting steady supplies from Argentina and Brazil, and even in the U.S., where drought was a concern, rainfall at the end of the month in key production areas eased corn market conditions. International wheat prices also declined as the northern hemisphere harvest got under way, with downward pressure in particular from supplies from the Russian Federation, which reduced export taxes in June, and favorable crop conditions in the USA. International rice prices also declined as demand for non-Indica rice weakened and export sales efforts from Pakistan also contributed to lower prices.

The vegetable oil price index fell 2.9 points, or 2.4 percent, month-over-month to 115.8 points in June, its lowest level since November 2020. Lower palm and sunflower oil prices offset higher soybean and rapeseed oil prices, and the two consecutive months of palm oil price declines were attributed to a combination of seasonal supply expectations from major producing countries and continued weak international demand. In contrast, the increase in international soybean and rapeseed oil prices reflected unfavorable weather conditions in major producing regions.

The dairy price index decreased by 1.0% from the previous month, while the meat price index was little changed from the previous month.

The sugar price index fell 5.1 points, or 3.2%, month-on-month to 152.2 points in June, after rising for four consecutive months through May. The decline reflects supply expectations from Brazil and weak global demand, but concerns about the impact of the 2023/24 El Niño on the sugarcane crop and the rising value of the Brazilian currency against the U.S. dollar have limited further declines. Indeed, international sugar prices are 34.9 percentage points (29.7%) higher than in the same month last year.

Meanwhile, the Black Sea Grains Initiative expires on July 17, just a week away.

Contributor: IIYAMA Miyuki (Information Program)