Global food prices increased for the third straight month in May, driven by rising cereal and dairy product prices, despite declines in sugar and vegetable oil prices, the Food and Agricultural Organisation (FAO) reported on Friday.
The FAO price index, which monitors the international prices of a basket of globally traded food commodities, averaged 120.4 points in May, a 0.9 percent increase from April.
Higher cereal and dairy prices were the main contributors, pushing the index to 122 points during the period.
Cereal prices surged to 119 points in May from 112 points in April, marking a 6.3 percent month-on-month increase, though they fell 8.2 percent year-on-year from 129 points. The FAO attributed this sharp monthly rise to concerns over poor crop conditions for the 2024 harvests in parts of Europe, North America, and the Black Sea region. Additionally, damage to the Black Sea shipping infrastructure exacerbated the price increases.
“Maize export prices also rose in May due to production concerns in Argentina and Brazil,” the FAO noted. The spillover effects from global wheat markets also influenced maize prices, and the prices of barley and sorghum increased as well.
The dairy price index, another significant factor, rose 1.8 percent to 126 points in May from 124 points in April, reflecting a 3.5 percent increase from the same period in 2023. The FAO reported that demand from the retail and food services sectors, coupled with a drop in milk production in Western Europe, drove the rise in dairy prices.
Conversely, the sugar price index fell 7.5 percent to 117 points in May from 127 points in April, marking the third consecutive monthly decline. This represents a 25.5 percent drop from the previous year and the lowest level since January 2023. The FAO attributed this decline to a favorable start to Brazil’s new harvest season and favorable weather conditions, which improved the global supply outlook. Increased export opportunities from Brazil and lower international crude oil prices further pressured sugar prices downward.
The vegetable oil price index averaged 128 points in May, down 2.4 percent from April’s 131 points, but still 7.7 percent higher than the previous year. The drop was primarily due to lower palm oil prices, which offset increases in soybean, rapeseed, and sunflower oil prices.
“International palm oil prices fell for the second consecutive month in May due to seasonal production increases in Southeast Asia and weak global import demand,” the FAO said.
The meat price index averaged 117 points in May, a slight 0.2 percent decrease from April and a 1.3 percent drop from May 2023. The FAO reported a decline in poultry and bovine meat prices, while pig and ovine meat prices rose. The drop in poultry prices was linked to increased export opportunities and lower domestic demand in major producing countries. In contrast, pig meat prices increased due to higher demand and ongoing supply tightness in Western Europe.
