UN FAO : Food Prices Rise for First Time This Year

By Will Horner

Global food prices rose in June for the first time this year, the United Nations' Food and Agriculture Organization said Thursday, suggesting that the sharp declines experienced by food commodities as the coronavirus has hit demand could be easing.

The UN FAO's monthly food price index, which tracks a basket of the most common foodstuffs such as grains, vegetable oils and meat, rose 2.4% in June to 93.2.

The rise halts four consecutive months of declining food prices, as measured by the FAO, that have come as supply has been slow to adjust to the pandemic's sharp impact on demand.

The rise in the overall index has largely come from jumps in the price of sugar and vegetable oils. The FAO's sugar price sub-index rose 10.6%, thanks to rising oil prices, which can incentivize Brazilian sugar mills to switch production from the sweetener to the biofuel ethanol.

A sub-index tracking vegetable oil prices rose 11.3% thanks largely to higher palm oil prices that have gained as the easing of coronavirus lockdowns has led to increased imports, the FAO said.

Other foodstuffs tracked by the index also rose though the increases were more muted. Dairy prices rose 4% as imports from the Middle East and East Asia were slowly recovering, the FAO said.

Cereal and meat prices both rose by 0.6%. While demand for staple foods like cereals have been less affected by the virus, harvest this year of many grains are expected to be very strong. Strong supplies of poultry and bovine meat also weighed on meat prices, the FAO said.

Write to Will Horner at [e-mail].