FAO: World food prices dip in May despite high meat and dairy costs

The benchmark of global food commodity prices eased in May, as significant drops in international quotations for maize and palm oil outweighed the high prices for dairy and bovine meat, flags the latest FAO Food Price Index. 

The Price Index, which tracks monthly fluctuations in the international prices of a set of globally traded food commodities, averaged 127.7 points in May, down 0.8% from April. Despite the monthly decline, the index remained 6% higher than its level a year earlier.

The FAO Cereal Price Index declined by 1.8% from April and stood 8.2% below its May 2024 level. International maize prices fell sharply, driven by strong harvests and export availability in Argentina and Brazil and predictions of a record crop in the US.

World wheat prices edged lower due to improved crop conditions across the northern hemisphere. At the same time, the FAO All-Rice Price Index increased by 1.4%, reflecting stable demand for fragrant varieties, rising Indica quotations, and currency fluctuations.

The Vegetable Oil Price Index decreased by 3.7% month-on-month, with declines recorded across all major oils. The drop was due to seasonal production increases and higher availability in Southeast Asia. Higher supply in South America and muted demand for biofuel feedstocks affected soy oil prices.

Rapeseed oil prices eased owing to improved supply prospects in the EU, while sunflower oil fell in response to weakening global import demand and reduced price competitiveness.

The FAO Sugar Price Index dipped by 2.6% in May amid concerns over the uncertain global economic outlook, potentially weakened demand from the F&B processing industries and expectations of a recovery in global sugar production in the upcoming season.

In contrast, the FAO Meat Price Index rose 1.3% from its revised April value, reflecting higher prices for ovine, pig, and bovine meats. Quotations for bovine meat reached a new all-time high, supported by global import demand.

Poultry meat prices declined, largely due to falling export prices from Brazil, where the detection of high-pathogenicity avian influenza on a commercial farm in mid-May led to import bans by several major trading partners, resulting in surplus supplies.

The FAO Dairy Price Index registered a slight increase of 0.8% in May. Robust import demand from Asia continued supporting historically high butter prices, pushing up costs for cheese and whole milk powder.

Cereal supply and demand outlook

FAO also released its latest Cereal Supply and Demand Brief, forecasting global cereal production in 2025 to reach a record 2,911 million metric tons, up 2.1% from 2024.

World cereal utilization is projected to increase by 0.8% in 2025/26, totaling 2,898 million metric tons. Food consumption is expected to rise by 0.9%, while feed use is forecast to grow by 0.5%.

World cereal stocks are predicted to grow by 1% in 2025/26 to reach 873.6 million metric tons, partially reversing last season’s contraction. The global cereal stock-to-use ratio is anticipated to remain broadly stable at 29.8%.