São Paulo – The World Price Index measured by the Food and Agriculture Organization of the United Nations (FAO) reached 175.2 points in June, up 1.4% above May’s and 7% higher than June of last year. The index surge was driven by the raise in price of wheat and meats, FAO reported this Thursday (6).
Wheat prices rose due to a worsening of crop conditions in the United States, which led the wheat price index to climb 4.2% from May to June and reach the highest level in a year. There was an increase also in the price of rice, due to the rise of international demand. On the other hand, maize prices went down, pressured by the record crop in South America.
According to FAO, the cereal index went up, despite the forecasts signaling that global stock will remain “abundant”, reaching a new record of 704 million tons. However, if the organization revised down its forecast for wheat production this year, it revised up its forecasts for the rice and maize crops.
With meats, the index went up 1.8% from May to June, the sixth consecutive moderate monthly increase. The limited supply from Oceania pressured up the prices of beef and sheep, while the poultry industry prices are being pressured by the fear of dissemination of bird flu in Europe, Asia and Africa.
The dairy index went up 8.3% in June over May and was near the highest level of the last three years. According to FAO, the limited supply from exporting countries put significant pressure on the prices of butter, cheese and skimmed powder milk, with powder whole milk also going up.
However, the sugar index went down 13.4% from May to June to the lowest level in 16 months. The decline is a reflection of the wide supply for exports, especially from Brazil, and the weak demand for imports, mainly from the world’s largest buying market, China, which adopted high import fees, choking sales.
The index for vegetable oils went down 3.9% in the same comparison, after a slight increase in May, due to the decline in the prices of palm and soy oil. In the case of soy, the strong performance of the South America crop vastly expanded the supply and drove down the prices. FAO believes that the 2017/2018 cycle will result in a close-to-record soy crop. The prices of rapeseed and sunflower oils also declined.
*Translated by Sérgio Kakitani
