world food prices may rise in july on us corn concerns
World food prices are expected to rebound in July from three consecutive months of falls, as concern over hot and dry weather in the U.S. corn belt boosts commodity prices on wider markets, the United Nations’ food body said Thursday.
The Food and Agriculture Organization noted commodity prices have recently started rising again, mainly because of deteriorating crop prospects in adverse weather, and most notably for corn in the U.S. This may mean the FAO’s food price index rises this month, it added.
“Given the current heatwave in the U.S. it’s very likely that corn prices will remain under upward pressure for some time,” said Abdolreza Abbassian, senior grains analyst at the FAO.
“It remains to be seen what the extent of the damage is and it’s not too late to get better, but time is running out,” he added.
Corn fields in the Midwest are suffering under relentless sunshine during a key pollination phase. Rabobank grains analyst Nick Higgins said there’s not a lot of moisture left in the soil and crops are looking very stressed, so the situation is dire.
“While conditions don’t look as bad as the disaster of 1988 yet, we will have only a tiny fraction of that year’s stock levels as we head into the new season, which elevates price risks,” Mr. Higgins said.
“It’ll be hard for the wider grains and oilseed complex to avoid prices rises, and will have follow through effects on the entire agricultural complex over the coming quarter,” he added.
Continued economic uncertainties and generally adequate supply prospects kept values down in June, the FAO said, as world food prices fell to their lowest level since September 2010.
The FAO’s food price index, which measures the monthly change in international prices of a basket of food commodities, fell by four points or 1.8% in June to a new level of 201 points.
The index now stands 15% below its peak in February 2011, after the price of all 55 commodity groups averaged lower levels than in May, with the largest drop registered for oils and fats.
However, the increase in corn prices during the second half of June underpinned wheat values, the FAO said, which were already experiencing some increases on downward adjustments to production forecasts in Russia.
Sugar prices also regained some strength towards the end of the month due to unfavorable harvesting conditions in Brazil, the world’s largest exporter, the FAO said.