In May, global food prices reached their lowest level in two years, driven by declines in vegetable oil, cereal, and dairy prices, which offset the increase in sugar and meat prices. The overall index, which tracks the prices of cereals, vegetable oils, dairy products, meat, and sugar on international markets, dropped by 3.4 points to 124.3 points compared to the previous month.

This figure marks the lowest level since April 2021 and is currently 22 percent below the record high reached in March 2022, following the start of the Russian invasion of Ukraine.

Cereal prices experienced a nearly five percent decline compared to the previous month, primarily due to expectations of sufficient supply and the extension of an agreement allowing shipments from Ukraine by sea. However, rice prices continued to rise in May, partly due to limited supplies in some exporting countries.

The vegetable oil price index witnessed an almost nine percent decrease, reflecting ample supplies of oilseeds and weak demand for palm oil. Dairy products also fell by over three percent, driven by the seasonal increase in milk production in the northern hemisphere. In contrast, sugar prices rose by 5.5 percent from April and recorded their fourth consecutive monthly increase.

Additionally, the Food and Agriculture Organization (FAO) predicted a one percent increase in grain production this year, reaching 2.813 billion tons, mainly attributed to a rise in corn harvest. Global grain stocks are expected to grow by 1.7 percent to 873 million tons in the 2023/2024 season.

These trends in global food prices indicate the ongoing dynamics of supply and demand in various agricultural sectors. The decline in prices for certain commodities reflects improved availability and weak demand, while price increases for sugar highlight a continuing upward trend. As grain production is projected to rise, it suggests a positive outlook for global food supply, potentially contributing to price stability in the coming months.

Article by Prague Forum