After the continuous rise of the global FAO Food Price Index over the last twelve months, June marks the first time in a year of average global food prices decreasing. They're still 25 percent pricier than the 2014-2016 average, on which the index baseline of 100 points is calculated, and 33 percent higher than in June 2020.
With nearly ten percent, the biggest drop can be attributed to the vegetable oil sector, reflecting lower prices for palm oil due to prospective seasonal production increase and lower import demand. The latter is also responsible for an increase in sunflower and soyoil prices. The soyoil demand in particular was influenced by the lower-than-expected uptake in biodiesel during the month of June.
For cereals, maize prices throughout Latin America and the US fell due to better-than-expected harvests. A favorable global production outlook in many key producers of barley, sorghum and wheat managed to outweigh the potential uptick in prices due to the dry conditions in North America.
Speculation about whether the disruptions of the coronavirus pandemic would drive up food prices have been abound, but due to the COVID-related economic downturn and falling out-of-house demand, they actually decreased at the start of 2020, reaching a low one year ago. According to the U.N., falling mineral oil prices also factored into the initial deterioration of food prices as many alternative fuels, which are made out of food stocks, saw demand fall. As the crisis wore on and some countries reopened at least temporarily, global demand and prices started to pick up again in the summer of 2020.