Global food prices are declining
The benchmark index of international food commodity prices declined in May amid significant drops in quotations for most cereals, vegetable oils and dairy products, the Food and Agriculture Organization of the United Nations (FAO) reported in early June 2023.
The FAO Food Price Index, which tracks monthly changes in the international prices of commonly-traded food commodities, averaged 124.3 points in May, down 2.6 per cent from April and as much as 22.1 per cent below the all-time high reached in March 2022.
Declining cereal price index, despite rising rice prices
The FAO Cereal Price Index declined 4.8 per cent from the previous month, led by a 9.8 per cent drop in world maize quotations thanks to a favourable production outlook along a sluggish import demand. World wheat prices also declined, by 3.5 per cent, reflecting ample supplies and the new extension of the Black Sea Grain Initiative. By contrast, international prices of rice continued to increase in May, sustained by Asian purchases and tighter supplies in some exporting countries, such as Viet Nam and Pakistan.
The FAO Vegetable Oil Price Index dropped by 8.7 per cent in May, averaging 48.2 per cent below its year-earlier level. International palm oil prices fell markedly from April, as protracted weak global import purchases coincided with rising outputs in major producing countries. World soyoil prices fell for the sixth consecutive month amid a bumper soybean crop in Brazil and higher-than-expected stocks in the USA. Rapeseed and sunflower oil prices continued to decline on ample global supplies.
The FAO Dairy Price Index declined by 3.2 per cent from April, led by a steep drop in international cheese prices due mainly to ample export availabilities amid seasonally high milk production in the northern hemisphere. However, international quotations for milk powders rebounded as did those for butter.
Increasing sugar and meat prices
The FAO Sugar Price Index posted its fourth consecutive monthly increase, up by 5.5 per cent from April and reaching a level nearly 31 per cent higher than a year earlier. The jump reflected tighter global availabilities, rising concerns over the impact of the El Niño phenomenon on next season’s crops, and shipping delays amid strong competition from soybean and maize in Brazil. The positive outlook for 2023 sugarcane crops in Brazil prevented larger monthly price increases, as did lower international crude oil prices.
The FAO Meat Price Index also rose in May, increasing by 1.0 per cent, driven primarily by a steady high Asian import demand for poultry meat and persistent supply tightness for bovine meat in the USA.
Read more on the FAO website