Global food prices rise at fastest monthly rate in a decade

Global food prices rose in May at their fastest monthly rate in more than a decade, the Food and Agriculture Organization (FAO) of the UN has reported.

The FAO Food Price Index averaged 127.1 points in May, 4.8% higher than in April and 39.7% higher than in May 2020.

A surge in the international prices of vegetable oils, sugar and cereals led the increase in the index, which tracks monthly changes in the international prices of commonly-traded food commodities, to its highest value since September 2011 and only 7.6% below its all-time peak in nominal terms.

Record cereal output expected

The FAO Cereal Price Index increased 6% percent from April, led by international maize prices, which averaged 89.9% above their year-earlier value.

However, maize prices started to retreat at the end of May, mostly on improved production prospects in the United States of America.

International wheat prices also showed a late-month decline but averaged 6.8% higher in May than in April, while international rice quotations held steady.

A record world cereal output is expected in 2021, pegged at nearly 2,821 million tonnes. This is 1.9% above the outturn in 2020, according to the Cereal Supply and Demand Brief.

The bulk of this year’s foreseen growth relates to maize, with output anticipated up 3.7% from 2020. Global wheat production is also expected to increase, up 1.4% year-on-year, while rice production is set to go up by 1%.

Food indices

The FAO Meat Price Index increased by 2.2% from April, with quotations for all meat types rising due to a faster pace of import purchases by China, as well as rising internal demand for poultry and pig meats in the leading producing regions.

The FAO Dairy Price Index rose by 1.8% in the month, averaging 28% above its level of one year ago.

The increase was led by solid import demand for skim and whole milk powders, while butter prices declined for the first time in almost a year on increased export supplies from New Zealand.

The FAO Vegetable Oil Price Index gained 7.8% in May, mainly reflecting rising palm, soy and rapeseed oil quotations.

Palm oil prices rose due to slow production growth in Southeast Asian countries, while prospects of robust global demand, especially from the biodiesel sector, drove soy oil prices higher.

The FAO Sugar Price Index increased by 6.8% from April, due largely to harvest delays and concerns over reduced crop yields in Brazil, the world’s largest sugar exporter, even as large export volumes from India contributed to easing the price surge.