Global food prices rise for third straight month

Source: ©Oleksandr Boiko via 123RF

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 120.4 points in May, up 0.9% from its revised April level, while it remained down 3.4% from its level a year ago and 24.9% below its March 2022 peak.

The cereal price index rose by 6.3% from April, powered higher by rising global wheat export prices, reflecting growing concerns about unfavourable crop conditions curbing yields for the 2024 harvests in major producing areas including parts of Northern America, Europe and the Black Sea region.

Maize export prices also increased in May, pushed up by production concerns in both Argentina, due to the Spiroplasma disease (also known as corn stunt disease), and Brazil, due to unfavourable weather, as well as spillover effects from the wheat markets and limited selling activity in Ukraine. The all-rice price index rose by 1.3% in May.

The dairy price index increased by 1.8% from April, underpinned by increased demand from the retail and food services sectors ahead of the summer holidays as well as market expectations that milk production in Western Europe may fall below historical levels.

Renewed import demand for spot supplies from some countries in the Near East and North Africa also lifted dairy prices.

The sugar price index, meanwhile, decreased by 7.5% from April, mainly driven by pressure from the good start of the new harvest season in Brazil. Lower international crude oil prices also exerted downward pressure on sugar prices, by lowering demand.

The vegetable oil price index declined by 2.4% from April. Lower palm oil quotations due to seasonal output increases and ongoing weak global demand more than offset higher prices of soy oil, due to increasing demand from the biofuel sector, and firmer prices of rapeseed and sunflower oils due mainly to diminishing export availabilities in the Black Sea region.

The meat price index decreased marginally, by 0.2%, as international prices of poultry and bovine meats fell while those of pig and ovine meats increased.

First global cereal forecast for the 2024/25 season

FAO also released its first forecast for the 2024/25 (July/June) season, anticipating world cereal production to total 2 846 million tonnes, virtually on par with the record output realised in 2023/24. Global maize and wheat outputs are forecast to decline, while barley, rice and sorghum are predicted to increase, according to the new Cereal Supply and Demand Brief.

However, the recent adverse weather conditions in the Black Sea region will likely result in a downgrade in world wheat production, a possibility not yet reflected in the forecast.

World cereal total utilisation in 2024/25 is expected to increase by 0.5% to a new record high of 2,851 million tonnes, led by increased food consumption, especially of rice.

World cereal stocks will likely increase by 1.5% above their opening levels to a record level of 897 million tonnes. Inventories of maize, barley, sorghum and rice are all expected to increase, while those of wheat could decline. The global stocks-to-use ratio will likely remain at 30.9%.

FAO predicts world trade in cereals to decline by 1.3% from the previous year to 481 million tonnes, led by lower trade prospects for maize. International rice trade is forecast to grow robustly.

For a more detailed analysis of global cereal markets, see the forthcoming issue of Food Outlook, which will be released on 13 June 2024.