The ceasefire between the US and Iran has squeezed out the "war premium", global food prices fell slightly by 0.3% in June, and a new concern arises as Europe's heatwave takes over from El Nio.

Due to the easing of concerns about supply chain disruptions caused by the ceasefire between the US and Iran, global food prices have slightly decreased. A report released by the United Nations Food and Agriculture Organization (FAO) on Friday showed that the global food commodity price index fell by 0.3% in June, mainly driven by grains and sugar. The temporary peace agreement reached between the US and Iran has opened a window for negotiations between the two countries, and has also led to a gradual resumption of trade transport through the Strait of Hormuz. This strait is a key passage for the transportation of grains, fertilizers, diesel, and other agricultural inputs. As the geopolitical risk premium that had previously swept the agricultural commodities and fertilizer markets gradually diminished in early June, market fears of long-term supply disruptions have significantly eased. However, as the Northern Hemisphere enters the harvest season, market attention is shifting to the record-breaking heatwave sweeping through Europe, leading to reduced sowing area, lower crop yields, and adverse weather effects. Meanwhile, the El Nio phenomenon is developing - this periodic climate pattern often causes uneven droughts and floods in the region - which may further impact global food security by damaging crop growth in major production areas. According to FAO's forecast, global cereal production is expected to reach nearly 3 billion tons in 2026, a 1.9% decrease from the historical peak reached in 2025, but still expected to rank as the second highest in history. Joseph Glauber, Honorary Research Fellow at the International Food Policy Research Institute (IFPRI), stated in an email, "The focus of the cereal and oilseed markets has returned to more traditional fundamental factors. Overall, crop growing conditions are good." The FAO price index covers various international trade food categories. Currently, the index is 1.7% higher than the same period last year, but is still nearly 19% lower than the historical peak reached after the Russia-Ukraine conflict erupted in March 2022.