ROME, ITALY — Global food commodity prices rebounded for the first time in 2020 pushed by vegetable oils, sugar and dairy, according to the Food and Agriculture Organization of the United Nations (FAO).
Despite the increase, cereals and meat prices remain low as the coronavirus (COVID-19) pandemic continues to cause uncertainty.
The FAO Food Price Index, which tracks international prices of the most traded food commodities, averaged 93.2 points in June, some 2.4% higher than the previous month.
Easing COVID-19 lockdowns have given a rise to palm oil import demands. The FAO Vegetable Oil Price Index gained 11.3% in June, after declining for four consecutive months. Price quotations of soy, sunflower and rapeseed oils also went up.
The FAO’s price index for both sugar and dairy increased as renewed demand hit the market.
However, the FAO’s cereal and meat price index both fell 0.6% from May.
“Downward pressure on wheat prices in June was in part due to new harvests in the Northern Hemisphere and improved production prospects in a number of major exporting countries, including the Black Sea region,” the FAO said.
Despite a slump in prices, the FAO expects world cereal production to top a new record of 2.79 billion tonnes in 2020, up 9.3 million tonnes from the May forecast.
The FAO’s Cereal and Demand Brief attributes this spike to Russia and India increasing wheat production.
World coarse grain production predictions are also up to a total of 1.519 billion tonnes, an increase of 5.7 million tonnes from the previous month.
“World cereal utilization in the year ahead is forecast to rise to 2.735 billion tonnes, up 1.6% from the previous month’s forecast, mostly driven by an upturn in feed and industrial uses of coarse grains compared to earlier expectations,” the FAO said.
Prime weather in South America is expected to pump up the FAO’s 2020 global rice production forecast to 509.2 million tonnes. Expanding food use is expected to boost the FAO’s rice utilization of the commodity to 510.4 million tonnes in 2020-21.
“FAO now expects world cereal stocks by the end of seasons in 2021 to reach 929 million tonnes, representing a robust year-on-year expansion of 6%,” the FAO said. “This would drive the global cereal stock-to-use ratio in 2020-21 to a 20-year high of 33%, highlighting the comfortable global supply prospects in the new season.”
Effective from July 2020, the price coverage of the food price index has been expanded and its base period revised from 2002-04 to 2014-16.
Follow our breaking news coverage of the coronavirus/COVID-19 situation.