International Food Commodity Prices Spike 4.2% in June

International food commodity prices shot up 4.2 percent in June, their steepest monthly increase of the past four years. The hike in June prices, which affected all commodity categories except vegetable oils, was the fifth consecutive monthly increase, according to the latest data released by the United Nation’s Food Agriculture Organization (FAO).

The Food Price Index averaged 163.4 points in June 2016, 4.2 percent higher than in May and 1 percent below the corresponding month last year. Not only did the June increase mark the fifth consecutive monthly rise in the value of the Index, but it also represented the largest monthly increase witnessed over the past four years. Except for vegetable oils, the values of all the commodity sub-indices moved up in June, led by a surge in the price of sugar and more moderate increases for cereals, dairy and meat.

The Cereal Price Index averaged 156.9 points in June, up 2.9 percent from May, but still 3.9 percent below the June 2015 level. Maize prices drove that increase, primarily due to tightening spot export supplies from Brazil. Ample wheat supplies and reports of record yields in the United States held down wheat prices.

The Vegetable Oil Price Index averaged 162.1 points in June, down 0.8 percent from May, primarily reflecting lower quotations of palm oil, due to subdued global import demand and a seasonal recovery in production in Indonesia and Malaysia. Prospects of ample sunflower and rapeseed oil supplies also weighed on the index. By contrast, soy oil prices increased, underpinned by reduced export availabilities in South America and less favorable than initially anticipated production prospects for 2016/17.

The Dairy Price Index averaged 137.9 points in June, up 7.8 percent from May. Average monthly prices for all the dairy commodities rose. An uncertain outlook for the 2016/17 milk year in Oceania and a slowdown of monthly milk production growth in the European Union in April caused quotations to strengthen. Despite the magnitude of the increase, the June rise only represented a recovery from the low prices prevailing in the preceding three months. Nonetheless, the index remained 14 percent below its level of a year ago.

The Sugar Price Index averaged 276 points in June, up as much as 14.8 percent from May. The surge mostly mirrored less positive production prospects in Brazil, the world’s largest sugar producer and exporter, following heavy rains which hampered harvesting operations and affected sugar yields.

The Meat Price Index averaged 158.3 points in June, 2.4 percent higher than its revised May value. Average quotations for pork, beef and poultry all rose for the third consecutive month.