ISLAMABAD: The benchmark index of international food commodity prices declined again in June, led by price decreases for major cereals and most types of vegetable oils, the Food and Agriculture Organisation of the United Nations (FAO) reported on Friday.

The ‘FAO Food Price Index’, which tracks monthly changes in the international prices of commonly-traded commodities, averaged 122.3 points in June, down 1.4 per cent from May and 23.4pc from its peak in March 2022.

The FAO Cereal Price Index declined 2.1pc from May. International coarse grain quotations in June decreased by 3.4pc, driven mostly by increased maize supply from ongoing harvests in Argentina and Brazil and improved output prospects in the United States.

Cereal production to hit a record high in 2023-24

International wheat prices dropped by 1.3pc, as harvests began in the Northern Hemisphere, influenced by ample supplies and a lower export tax in the Russian Federation, along with improved conditions in the US. International rice prices declined by 1.2pc amid subdued demand for non-Indica varieties and efforts by Pakistan to attract export sales.

The FAO ‘Vegetable Oil Price Index’ declined by 2.4pc from May, as lower world prices of palm and sunflower oils more than offset increases in quotations for soy and rapeseed oil, influenced by weather conditions in major growing regions. The FAO ‘Dairy Price Index’ declined by 0.8pc cent in June, led by lower international cheese prices.

The FAO ‘Sugar Price Index’ declined by 3.2pc, mainly triggered by good progress of the sugarcane harvest in Brazil and sluggish global import demand, particularly from China.

World cereal production is predicted to hit a record high in 2023-24, according to the latest ‘Cereal Supply and Demand Brief’, which was also released on Friday.

FAO raised its 2023 global cereal production forecast to 2,819 million tonnes, indicating a 1.1pc increase from the previous year. The higher forecast almost entirely reflects better prospects for global wheat production, now pegged at 783.3m tonnes, buoyed by improved outlooks in several countries including Ca­­na­da, Kazakhstan and Turkiye. However, global wheat production is still seen falling below last season’s output by 2.3pc.

Global coarse grain output for the year is now forecast to grow by 2.9pc from 2022 to 1,512m tonnes. Likewise, world rice production in 2023-24 is expected to rise by 1.2pc above the 2022-23 reduced level, to 523.7m tonnes.

The FAO raised its forecast for cereal stocks by the close of 2023-24 seasons to 878m tonnes, some 2.3pc higher from the previous season. At this level, the global cereal stocks-to-use ratio would remain unchanged at 30.6pc, “indicating comfortable supply prospects in the new season”.

Published in Dawn, July 8th, 2023