Demand for vegetable oils, sugar and dairy help global food commodity prices rebound in June

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 93.2 points in June 2020, up 2.2 points (2.4%) from May. Amid market uncertainties posed by COVID-19, the prices of vegetable oils, sugar and dairy products rebounded to multi-month highs following sharp declines registered in May, while in cereals and meat markets, most prices remained under downward pressure.

The Cereal Price Index averaged 96.9 points in June, down 0.6% from May and 1.9 points (1.9%) below the same month last year. Downward pressure on wheat prices in June was in part due to new harvests in the northern hemisphere and improved production prospects in several major exporting countries, including the Black Sea region. Barley and sorghum export prices also fell in June, reflecting generally good production prospects amid timid global import demand. By contrast, following several months of decline, maize price quotations were firmer in June, supported by some recovery in demand and adverse growing conditions in the U.S.

The Vegetable Oil Price Index averaged 86.6 points in June, gaining 8.8 points (11.3%) after declining four consecutive months. The rebound mainly reflects a sharp rise in palm oil prices due to recovering global import demand, following the easing of COVID-19 related lockdowns in several countries, and concerns over possible production setbacks amid prolonged migrant labor shortages. Price quotations of soy, sunflower and rapeseed oils also went up.

The Dairy Price Index averaged 98.2 points in June, up 3.8 points (4%) from May. June marked the first increase in the value of the Index after four months of consecutive declines, even though the Index remained 4.6% below its level in the corresponding month of 2019. Renewed import demand for spot supplies, especially from the Middle East and East Asia, coupled with seasonally declining supplies in Europe and limited availability of uncommitted supplies in Oceania, underpinned the recent price increases.

The Sugar Price Index averaged 75 points in June, up 7.2 points (10.6%) from May. The surge in crude oil prices provided strong support to sugar markets, encouraging Brazil's sugar mills to use more sugarcane supplies to produce ethanol instead of sugar, thereby affecting sugar export availabilities and prices. Recent reports of bottlenecks in Brazilian ports due to the measures imposed to contain the spread of the coronavirus helped push up sugar prices.

The Meat Price Index averaged 95.2 points in June, down 0.6% from May and 6.1 points (6%) below its June 2019 level. Bovine meat and poultry price quotations fell, largely due to increased export availabilities in major producing regions, whereas pig meat prices registered a small increase, mostly in Europe, on expectation of the further easing of COVID-19 market restrictions.