Photo Credit: Flickr: Uwe Potthoff

The FAO Food Price Index rose again in June for the fifth consecutive month, based largely on surging sugar prices and more moderate increases for cereals, dairy, and meat. The 6.6 point increase represents the largest monthly movement in the last four years.

The Cereals Index rose 4.4 points from May, but remains 3.9 percent below June 2015 levels. Strengthened maize prices drove most of this month's increases, as tightening export supplies in Brazil caused prices to rise.

The Oil Price Index fell 1.3 points from May, due mainly to decreased global demand for palm oil and seasonal production recovery in Indonesia and Malaysia. Soy oil prices increased, however, based on reduced export supplies in South America and less favorable production prospects for 2016-2017.

The Dairy and Meat Indices rose 9.9 and 3.8 points in June, respectively. The Sugar Index surged by as much as 35.6 points, based on unfavorable production prospects in Brazil.

The latest AMIS Market Monitor was also released this week. The report cites more volatile commodity markets in June, based on weather factors and the recent vote by the United Kingdom to leave the European Union.

Global supply and demand outlooks, on the other hand, remain largely unchanged from recent months. Wheat production is forecast up and is now expected to be only 2 million tonnes below last year's record level. Wheat utilization forecasts also increased, but global ending stocks are expected to be at a 15-year high. Maize production forecasts decreased in June and utilization forecasts increased slightly, causing predicted ending stocks to decline for the second consecutive season. Rice production forecasts increased slightly and ending stock expectations improved; however, stocks are still forecast to be 3 percent below opening levels. Soybean production prospects fell slightly but remain 2 percent higher than 2015-2016 levels. Soybean ending stocks are expected to fall to a four-year low, however.

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