May saw the lowest level in the past two years for the world price index reported by the UN food agency, as declines in the cost of dairy, cereals, and vegetable oils outpaced rises in the price of sugar and meat.
Compared to a revised 127.7 for the prior month, the Food and Agriculture Organization’s (FAO) price index, which covers the most widely traded food items, averaged 124.3 points in May. The reading for April was first reported as 127.2.
The index was now 22% below an all-time record reached in March 2022, following the start of Russia’s invasion of Ukraine, and the May score was the lowest since April 2021.
Ample supply prospects and the extension of the Black Sea Grain Initiative, which now permits imports from Ukraine, both contributed to an almost 5% decline in the FAO’s grain price index in May compared to the previous month.
International rice prices did, however, continue to rise in May, in part because of limited supply in some exporting nations, according to FAO. The agency raised alarm over the rising cost of the staple last month.
Vegetable oil prices worldwide decreased over 3% due to seasonal increases in milk production in the northern hemisphere, while palm oil demand was poor and the FAO vegetable oil price index fell nearly 9% month over month.
Contrarily, sugar prices showed a 5.5% increase from April in a fourth straight monthly advance as worries about the El Nino weather pattern increased the risks associated with the world’s supply, according to FAO.
However, it said, better weather in Brazil and falling crude oil costs have restrained sugar markets. Sugar futures experienced a 12-year high in late April before declining in May.
The FAO predicted that the world will produce 2.813 billion tonnes of grains this year, an increase of 1% from 2022 that was primarily due to an anticipated increase in maize output.
With bigger anticipated inventories of maize, rice, and barley, it was predicted that global grain stocks in the 2023–2024 season would increase 1.7% year over year to a record 873 million tonnes.
However, because output was anticipated to decline while demand was anticipated to remain consistent, a decline in wheat inventories was predicted.