According to a report released on Friday by the Food and Agriculture Organization of the United Nations (FAO), the benchmark for global food commodity prices rose in May for the third straight month.
This increase was attributed to higher prices for dairy products and cereals, which offset declines in quotations for sugar and vegetable oils.
The average value of the FAO Food Price Index, which measures monthly variations in the prices of a selection of internationally traded food commodities, was 120.4 points in May, up 0.9 per cent from its revised April level. However, it was still down 3.4 per cent from the previous year's level and 24.9 per cent below the peak reached in March 2022.
Cereal Price Index
With rising wheat export prices driving up the FAO Cereal Price Index, which increased by 6.3 per cent from April, there is growing concern that unfavorable crop conditions will reduce yields for the 2024 harvests in major producing regions, such as parts of Northern America, Europe, and the Black Sea region.
In addition, concerns about production in Brazil due to unfavorable weather and 'Spiroplasma disease' (also known as corn stunt disease) in Argentina, as well as ripple effects from the wheat markets and low selling activity in Ukraine, drove up maize export prices in May. In May, the FAO Rice Price Index increased by 1.3 per cent.
Dairy Price Index
Ahead of the summer holidays, the retail and food services sectors saw a spike in demand, and market expectations that milk production in Western Europe might decline from historical levels supported a 1.8 per cent increase in the FAO Dairy Price Index from April.
Dairy prices were also raised by a renewed demand for spot supplies from nations in North Africa and the Near East.
Sugar Price Index
Meanwhile, the positive start to the new Brazilian harvest season put pressure on the FAO Sugar Price Index, which fell by 7.5 per cent from April. Because fewer people were buying sugar, lower global crude oil prices also put downward pressure on sugar prices.
Vegetable Oil Price Index
In April, the FAO Vegetable Oil Price Index decreased by 2.4 per cent. Reduced quotes for palm oil as a result of seasonal production spikes and persistently low global demand more than offset increased prices for soy oil as a result of growing demand from the biofuel industry and increased prices for rapeseed and sunflower oils as a result of declining export opportunities in the Black Sea region.
