Global Food Prices Decline in May Amid Lower Cereal, Sugar, and Vegetable Oil Costs

Global food commodity prices fell in May, driven primarily by notable declines in cereals, sugar, and vegetable oils, according to the United Nations Food and Agriculture Organization (FAO). The FAO Food Price Index, which tracks monthly price movements of internationally traded food commodities, averaged 127.7 points in May, representing a 0.8% drop from April.

Cereal Prices Drop on Ample Supply and Strong Harvests

The FAO cereal price index decreased 1.8% month-on-month, mainly due to a sharp fall in maize prices. Robust harvests and ample stockpiles in major producing countries like Argentina and Brazil, combined with expectations of a record crop in the United States, contributed to the downward pressure. Wheat prices also softened slightly, reflecting improved crop conditions in the northern hemisphere. However, rice prices bucked the trend, rising 1.4% supported by steady demand for fragrant varieties and currency fluctuations.

Highlights:

• FAO cereal index down 1.8% in May, led by maize.

• Strong harvests in Argentina, Brazil, and the U.S. boost supply.

• Wheat prices ease due to better crop conditions.

• Rice prices up 1.4% on firm demand and currency effects.

Vegetable Oils and Sugar Prices Slide Amid Supply and Demand Dynamics

Vegetable oil prices fell 3.7% from April, with all major oils experiencing declines. Palm oil prices dipped due to seasonal output increases in Southeast Asia. Soybean oil prices weakened amid higher South American supplies and reduced biofuel demand. Rapeseed and sunflower oils also saw price drops driven by improved EU supplies and soft global demand, respectively.

The FAO sugar price index dropped 2.6%, reflecting a subdued global economic outlook, weaker demand from the food and beverage sector, and expectations of a production rebound next season.

Highlights:

• Vegetable oil prices down 3.7%, led by palm and soy oils.

• Sugar prices fall 2.6% on weaker demand and production forecasts.

• Seasonal output increases and supply growth weigh on oil prices.

Meat and Dairy Prices Show Mixed Trends

Meat prices rose 1.3% month-on-month, with beef reaching record highs amid increases in pork and sheep meat prices. Conversely, poultry prices declined due to surplus supplies in Brazil following import restrictions related to a bird flu outbreak.

Dairy prices rose 0.8%, bolstered by strong demand from Asia. Butter prices remain at historic highs, supported by increases in cheese and whole milk powder prices.

Highlights:

• Meat prices up 1.3%, beef at record levels.

• Poultry prices fall due to Brazilian supply surpluses.

• Dairy prices rise 0.8%, with butter at historic highs.

FAO Forecasts Record Global Cereal Production for 2025

In a related report, the FAO forecasted record global cereal production of 2.911 billion metric tons in 2025, an increase from its prior estimate of 2.848 billion metric tons and 2.1% higher than 2024 levels. This production is expected to exceed global consumption, allowing cereal stocks to grow by 1.0% and partially recover from last year’s contraction.

Highlights:

• Record cereal production of 2.911 billion metric tons forecast for 2025.

• Production up 2.1% from 2024 and surpassing consumption.

• Global cereal stocks expected to increase by 1.0%.