FAO Reports Decline in Global Dairy Prices Amid Oversupply
According to the United Nations Food and Agriculture Organization (FAO), the global dairy price index experienced a 1.5% decrease in June 2026 compared to the previous month. This decline is attributed to a significant oversupply in the international market, particularly affecting skimmed milk powder, whole milk powder, and butter prices. Cheese prices also fell for the eleventh consecutive month due to an overwhelming exportable supply outpacing import demand.
The overall FAO food price index averaged 130.3 points in June, marking a slight 0.3% drop from May, but still showing a 2.2% increase over the previous year. Boubaker Ben-Belhassen, director of the FAO's Markets and Trade Division, emphasized the necessity of transparency and predictability in trade to support global food sovereignty amidst uncertain macroeconomic conditions.
In parallel, the FAO cereal price index fell by 3.5% from May, easing feed costs but disrupting the livestock supply chain. Global wheat prices dropped by 4.4% due to rapid harvest progress and strong supply prospects in the Black Sea region. Corn prices plummeted by 6.2%, driven by abundant inventories in South American exporting countries and reduced ethanol milling demand. Conversely, rice prices rose by 3.2%, fueled by strong Asian demand.
Meat prices exhibited mixed trends, increasing by 0.5% overall to reach a new record high. The rise was driven by higher poultry prices following temporary local supply restrictions to correct previous oversupply. Meanwhile, pork and beef prices saw moderate declines. The vegetable oil price index increased by 3.8%, supported by heightened biofuel demand bolstering palm and rapeseed oil prices.
For Mexican dairy producers, the depressed international dairy prices present an immediate challenge to maintaining profit margins. Addressing pressures from substitute inputs and external volatility requires significant efficiency improvements in modern dairy farms and optimizing milking routines. Sector analysts suggest reinforcing internal supply chains and advocating for fair market regulations against indiscriminate powder imports to protect the viability of Mexican agriculture.
