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As Meat, Dairy And Wheat Climb, Global Food Prices Around Two-Year High In June

As Meat, Dairy And Wheat Climb, Global Food Prices Around Two-Year High In June
Fueled by higher prices for wheat, meats and dairy products such as butter, international food prices soared to around two-year highs during June.
According to data released Thursday by a United Nations agency, the gains have outpaced most other major food commodity groups and global meat prices have risen every month so far, this year.
The meat prices are helped to be kept strong by stronger global demand, analysts say. While the U.S. last month returned to shipping beef supplies to the Chinese market, it is one of the fastest-growing meat categories in Asia.
Compared to a low for food prices set in early 2016, global food prices are up 17 percent and are 7 percent from a year ago, according to the U.N. Food and Agriculture Organization’s Food Price Index.
The FAO Meat Price Index rose nearly 2 percent in June and is up about 10 percent from a year ago. The meat index is ahead almost 21 percent from its low set in early 2016 year-to-date.
The opening of U.S. beef sales to China could make it a multibillion-dollar market to American producers within a few years even though Australia has been a major exporter to China as well as to South Korea and Japan. A taste for more Western foods and a rise in household incomes has driven the rise of beef demand in China.
helping support recent prices for meats and helping spur demand in the U.S. market was the barbecue-grilling season.
"We're getting a seasonal run up in some of the meat prices," said Bill Lapp, president at Advanced Economic Solutions in Omaha. "Supplies still appear ample to meet demand and that is probably going to lead to moderation in prices."
In recent months, the price of beef trimmings, which are added to ground beef to add more flavor to burgers, have been volatile, Lapp said. "Chicken breast is having its turn now as well," he said. In June, there has been an elevation in the U.S. wholesale prices for chicken breast meat.
Similarly, with U.S. lean hog futures closing out June at 2-1/2 year highs, pork prices have been particularly strong. The hog market is expected to peak soon according to some experts.
The FAO's Dairy Price Index was seen soaring 8 percent in June alone due to global dairy prices finding support. Butter's continued resurgence is helping it stay elevated as it is up more than 50 percent from a year ago.
"Prices of all dairy products that constitute the index rose, but butter price increased the most," said FAO. It said butter prices rose 14.1 percent from May to an all-time high.
Added FAO, "Limited export availabilities of dairy products in all major producing countries caused the prices of butter, cheese and skim milk powder to rise significantly, contributing also to stronger whole milk powder prices."
"Butter prices are extremely high in the U.S. while cheese prices remain more stable," said Lapp, a former chief economist at ConAgra. New Zealand, which is also a major dairy producer, saw its butter prices rise sharply in June but not as high as the FAO's international index, while whole milk powder was weak.
Meantime, due to record harvests in South America, wheat price jumps more than offset softness in corn prices.
"There are varieties of wheat that are short, like in Minneapolis [with the spring wheat]," said James Cordier, president and head trader at in Tampa, Florida. "But for the most part, [for] corn, soybeans and wheat there's plenty of supply to go around and only an absolute disastrous crop would support prices higher than where they are now."
Yield concerns from a worsening drought in U.S. and Canadian regions growing high-protein spring wheat crop are the reasons that the global wheat price increases in June noted.
"Wheat captured the headlines, so it's been the leader per se," Cordier said. "But 30 days from now everyone will be watching corn and soybeans. They won't be watching wheat so close."

Christopher J. Mitchell

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