FAO: International Food Price Index Declines in May

The FAO reports that the reference index for international food prices decreased in May due to significant declines in quotations for most cereals, vegetable oils, and dairy products.

The FAO Food Price Index, which tracks monthly changes in international prices of commonly traded food commodities, averaged 124.3 points in May, down 2.6% from April and up to 22.1% below its historic peak reached in March 2022.

The FAO Cereal Price Index declined by 4.8% compared to the previous month, driven by a 9.8% decrease in global maize prices due to favorable production prospects and sluggish import demand.

Global wheat prices also fell by 3.5%, reflecting ample supplies and the expanded Black Sea Grain Initiative. In contrast, international rice prices continued to rise in May, supported by purchases from Asia and tighter supplies in some exporting countries such as Vietnam and Pakistan.

The FAO Vegetable Oil Price Index decreased by 8.7% in May, averaging 48.2% below its level a year earlier. International palm oil prices decreased significantly from April as weak and protracted import demand coincided with increased production in major producing countries.

Soybean oil prices declined for the sixth consecutive month, driven by an extraordinary soybean harvest in Brazil and larger-than-expected stocks in the United States. Rapeseed and sunflower oil prices continued to decrease due to ample global supplies.

The FAO Dairy Price Index declined by 3.2% compared to April, led by a sharp drop in international cheese prices, mainly due to ample export availabilities amid high seasonal milk production in the northern hemisphere. However, international prices for skim milk powder returned to previous levels, as did prices for butter.

The FAO Sugar Price Index recorded its fourth consecutive monthly increase, rising by 5.5% compared to April and reaching a level nearly 31% higher than a year earlier. The increase reflected tighter global availability, growing concerns about the impact of El Niño on next season's crops, and transport delays due to strong competition from soybeans and corn from Brazil.

Positive prospects for Brazil's sugarcane crops in 2023 prevented larger monthly price increases, as did low international oil prices.

The FAO Meat Price Index also increased in May, rising by 1.0%, primarily driven by continued strong import demand for poultry meat from Asia and persistent limitations on beef supplies in the United States.

Outlook

Early prospects for the 2023/24 season indicate a likely 1.0% increase in global cereal production in 2023, reaching 2,813 million tonnes, according to FAO's latest report on cereal supply and demand, also released today.

The estimated growth is based on anticipated gains for maize, rice, and sorghum, while wheat and barley production may decrease below 2022 levels.

FAO's initial forecast for global cereal utilization in 2023/24 is now set at 2,803 million tonnes, a 0.9% increase from 2022/23 levels, primarily driven by higher use for animal feed, mostly maize, followed by increased food consumption, particularly wheat and rice.

Based on these initial forecasts, global cereal stocks in 2023/24 could increase by 1.7% above opening levels and reach a record 873 million tonnes, while the ratio of global cereal stocks to use would marginally decline to 30.4%.

World trade in cereals in the 2023/24 marketing season is forecast at 472 million tonnes, close to the 2022/23 level, as the expected higher volume of coarse grains and rice trade (rice trade from January to December 2024) would offset an estimated decline in global wheat trade.