FAO: Global food prices declined in May — but cost of meat, wheat remains high

The Food and Agricultural Organization (FAO) says global food prices declined for the second consecutive month in May, driven by the downturn in prices of vegetable oil and dairy products.

FAO disclosed this in its latest food price index (FPI) report released on Friday.

The report measures the monthly change in international prices of five food commodity groups which are cereals, vegetable oil, dairy, meat, and sugar.

“The FAO Food Price Index (FFPI) averaged 157.4 points in May 2022, down 0.9 points (0.6 percent) from April, marking the second consecutive monthly decline, though still 29.2 points (22.8 percent) above its value in the corresponding month last year,” the report reads.

“The drop in May was led by declines in the vegetable oil and dairy price indices, while the sugar price index also fell to a lesser extent. Meanwhile, cereal and meat price indices increased.”

According to the report, vegetable oil prices reduced by 3.5 percent in May compared to April.

It said the decline mainly reflected lower prices across palm, sunflower, soy, and rapeseed oils.

FAO also said its dairy price index averaged 141.6 points in May, down 5.1 points (3.5 percent) from April, marking the first decline after eight consecutive monthly increases.

“World prices of all milk products fell, with milk powders declining the most, underpinned by lower buying interests on market uncertainties stemming from the continued lockdown in China, despite the persistent global supply tightness,” the report adds.

“Butter prices also dropped significantly due to weaker import demand in tandem with some improvements to supplies from Oceania and limited internal sales in Europe.

“Meanwhile, robust retail sales and high demand from restaurants ahead of the summer holidays in the Northern Hemisphere prevented cheese prices from falling significantly, despite weakened global import demand.”

Similarly, sugar prices reduced as a result of limited global import demand and good global availability prospects, mostly stemming from a bumper crop in India.

FAO, however, said wheat prices increased due to India’s announcement of an export ban, as well as reduced production prospects in Ukraine following the Russian invasion.

“The FAO cereal price index averaged 173.4 points in May, up 3.7 points (2.2 percent) from April and as much as 39.7 points (29.7 percent) above its May 2021 value. International wheat prices rose for a fourth consecutive month, up 5.6 percent in May, to average 56.2 percent above their value last year and only 11 percent below the record high reached in March 2008,” the report adds.

“By contrast, international coarse grain prices declined by 2.1 percent in May but remained 18.1 percent above their value a year ago.”

FAO added that its meat price index rose by 0.5 percent in May, with stable world bovine meat prices and falling pig meat prices offset by a steep increase in poultry meat prices.