FAO: World food prices hit two-year low in May

Food and Agriculture Organization (FAO) index of world food prices fell in May to its lowest level in two years, as sharp declines in the prices of vegetable oils, cereals and dairy products outweighed increases in the prices of sugar and meat.

According to “Reuters”, the United Nations organization said on Friday that its index, which tracks the prices of the most traded food commodities globally, averaged 124.3 points in May, compared to 127.7 points after adjustment in the previous month.

The May reading is the lowest since April 2021, which means that the general index is now 22 percent lower than the highest level it reached in March 2022 after the start of the Russian invasion of Ukraine.

FAO grain price index declined by about 5% in May from the previous month, under pressure from the prospects of abundant supply and the extension of the grain export initiative from the Black Sea ports that allow Ukrainian shipments.

But international rice prices continued to rise in May, partly due to tight supplies in some exporting countries, according to the FAO, which last month expressed concern about rising prices.

FAO Vegetable Oil Price Index fell nearly 9 percent month-on-month, reflecting large supplies of zinnia seeds and weak demand for palm oil. Dairy products prices fell by more than 3 percent amid a seasonal increase in milk production in the northern half of the world.

FAO said sugar prices bucked this trend, rising 5.5 percent from April, an increase for the fourth month in a row, as concerns related to the El Niño weather phenomenon exacerbated risks to global sugar supplies.

In a separate report on cereal supply and demand, FAO expected global cereal production this year to reach 2.813 billion tons, an increase of 1 percent over 2022, which mainly reflects an expected increase in maize production.

FAO expected global cereal stocks to increase in the 2023-2024 season by 1.7 percent on an annual basis to a record level of 873 million tons, reflecting an expected increase in stocks of maize, rice and barley.

Otherwise, it is expected that wheat stocks will decline, as production is expected to decline and demand will stabilize.