World basic food prices in June were broadly unchanged from May. Compared to June last year, they are 2% lower, and compared to the peak in March 2022 — by almost a quarter. In June, vegetable oils, sugar and dairy products became more expensive, while the prices for grain dropped significantly. This was reported by the Food and Agriculture Organization of the United Nations (FAO).
During the month, prices for cereals decreased by 3%. Moreover, all types of grain crops became cheaper. Compared to June last year, prices are now 9% lower. «The decrease in wheat prices was mostly a reflection of seasonal fluctuations due to the current harvesting campaign in the Northern Hemisphere,» FAO experts believe. At the same time, in a number of leading exporting countries, including Kazakhstan and Ukraine, crop forecasts were improved. In addition, a temporary ban on imports by Turkey, which is the second buyer of Russian wheat, contributed to the decline in prices. Corn prices fell due to expectations of a larger than expected harvest in Argentina and Brazil and the expansion of planted areas for this crop in the United States. Rice prices also fell due to low demand.
In June, grain prices declined before the new crop arrives on the market, Dmitry Rylko, General Director of the Institute for Agricultural Market Conjuncture (ICAR), explained to «RG». Literally for the last week prices for Russian wheat (12.5% protein) decreased from 225 to less than 220 dollars per ton. And, most likely, the decline will continue in July, the expert believes. There are several reasons for this. First, it is a very good harvest (despite the drought) in two key Russian export-oriented regions — Krasnodar and Stavropol. And in general, a good grain harvest is expected everywhere in the Black Sea region. «The Krasnodar and Stavropol regions, Ukraine, Bulgaria and Romania are very well fed. And these are regions oriented to foreign markets,» explains Rylko.
In the last week alone, prices for Russian wheat fell from $225 to less than $220 per tonne
Secondly, as ICAR experts have repeatedly warned, in Europe, it seems that carryover stocks have turned out to be significantly higher than their official estimates. Third, the new harvest in Western Europe will also be higher than forecast.
«The fourth and main factor is that at the end of the old season and in the new season we have big chunks of demand ‘falling off’. We are talking about Turkey, Iran, Bangladesh and some other major markets,» says Rylko.
Perhaps a sharp deterioration of weather conditions during harvesting somewhere in the Old World can smooth out these factors. Because of this, the quality of grain may fall, and prices will start to rise, the expert explains.
Recently, there has been a lot of talk about the possible opening of the Indian market — in this case, additional demand can also stop the decline and lead to higher prices. «But these are still theories, and in reality it was another week of lower prices for the new harvest,» says Rylko.
Grains are the main product of Russian agroexport. According to the federal center «Agroexport» under the Ministry of Agriculture, cereals accounted for 37% in the structure of Russian agro-industrial exports in 2023. At the same time, more than 75% of all exported grain is wheat. According to Rusagrotrans, last agricultural season (ended June 30) Russia exported 55.4 million tons of wheat, thus increasing its share in the world market to 28% (from 25% in the previous agricultural year).