Global food prices edged lower in June as cereals, sugar and dairy products became less expensive, though an intense El Nino added uncertainty to production outlooks, the United Nations' Food and Agriculture Organization said.
The FAO's food price index--which tracks a basket of widely traded food commodities--averaged 130.3 points in June, 0.3% down on May. However, prices are 2.2% higher than June 2025.
Cereal prices fell by 3.5% on May, as bumper wheat harvests caused prices to fall. Wheat supply from the Black Sea region countered concerns around crop development in the U.S. and Australia. Maize prices slid 6.2%, as strong output in South America boosted supply, while lower oil prices discouraged farmers from diverting crops to make biofuels.
Dairy prices slipped 1.5%. Skim milk powder ended a five-month run of price increases after EU output improved, while butter and cheese prices slipped on strong production from the EU and the U.S.
Sugar prices slid 5.7% on month, as fewer Brazilian farmers diverted sugarcane to ethanol production, while a weakening of Brazil's real helped foreign buyers.
Bucking the falling trend, meat prices edged up 0.5% to a new record high. Higher poultry prices were behind the rise, as pig and bovine prices moved lower. Demand for poultry led to higher export prices in Brazil.
Vegetable oil prices rose 3.8% compared to May amid concern around the supply outlook for palm oil in Indonesia.
Both sugar and Indonesian palm oil are among the commodities threatened by what meteorologists expect to be an especially strong El Nino, which could bring drought and disrupt rainfall patterns across key farming regions. Sugar crops in India and Thailand could be hit by abnormal conditions, while the prospect of extreme heat in Indonesia could stress oil trees.
Moreover, the weather system could hit global cereal production, the FAO said. Australian official data forecast wheat production falling below its five-year average as a result of El Nino-linked conditions.
Despite the concerns, resilient supplies and strong harvest progress are underpinning confident market sentiment, the FAO said.
Write to Joe Stonor at josephmichael.stonor@wsj.com
(END) Dow Jones Newswires
July 03, 2026 07:53 ET (11:53 GMT)
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