Informist, Friday, Jun. 6, 2025

NEW DELHI – The UN Food and Agriculture Organization's Food Price Index fell 0.8% to 127.7 points in May as a fall in indices of cereal, sugar, and vegetable oil prices outweighed the rise in those of meat and dairy products. The FAO Food Price Index was 6% higher than a year ago but still 20.3% below the peak it had touched in March 2022, the organisation said in a report.

The Cereal Price Index averaged 109.0 points in May, down 1.8% on month and 8.2% on year. The fall came as global maize prices declined sharply during the month, on firm competition and increasing seasonal availability from ongoing harvests in Argentina and Brazil, with harvesting in both countries ahead of last year's pace by the end of May, the organisation said. Expectations of a record maize harvest in the US this year also contributed to the downward pressure on prices.

The report noted the drop in world prices of sorghum and barley, among other coarse grains. International wheat prices declined as well, albeit more moderately, on subdued global demand and improving crop conditions in the northern hemisphere. Rainfall towards the end of the month reduced the risk of drought in parts of Europe, the Black Sea region, and the US.

However, the FAO All Rice Price Index rose 1.4% in May, driven by firm demand for fragrant varieties of rice and higher prices of Indica rice, partly influenced by currencies of some exporting countries appreciating against the dollar, as per the report.

The FAO Sugar Price Index averaged 109.4 points in May, down 2.6% on month and 6.6% on year. This marked the third consecutive monthly decline in sugar prices. The drop, the organisation said, was driven by weaker global demand for sugar amid the uncertain global economic outlook and concerns about its impact on demand from the beverage and food-processing industries. Additionally, early forecasts of a likely recovery in global sugar production in the sugar year 2025-26 (Oct-Sept), supported by expectations of larger outputs in India and Thailand following early onset of the monsoon, exerted further downward pressure on prices, it said.

The Vegetable Oil Price Index averaged 152.2 points in May, down 3.7% on month, but 19.1% higher than a year ago. The continued decline, the organisation said, reflected lower quotations for palm, rapeseed, soy, and sunflower oils.

International palm oil prices in May declined markedly for the second consecutive month, maintaining a discount over competing oils since mid-April. The drop was primarily underpinned by seasonally larger outputs and availability of larger quantities for export in Southeast Asia, it said. Global soyoil prices also decreased, pressured by increasing supplies in South America and subdued demand for biofuel feedstock, particularly in the US. Rapeseed oil prices dropped, mostly reflecting improved supplies with the imminent harvest in the European Union, while sunflower oil prices fell on weakening global import demand and declining price competitiveness, the report said.

In contrast, the FAO Meat Price Index, averaging 124.6 points in May, was up 1.3% on month and 6.8% on year. The increase was driven by higher international prices for bovine, ovine, and porcine meats, which more than offset a decline in poultry meat quotations.

Ovine meat prices rose, driven by higher quotations in Oceania supported by strong global import demand, particularly from China, West Asia, and Europe. Pig meat prices also increased, bolstered by strengthening global demand and sharply rising German export prices after the country regained the status of being foot-and-mouth disease-free, the organisation said.

Global bovine meat prices edged up to a new historical high, amid solid global demand and tight exportable supplies in major producing countries, it said. However, poultry meat prices declined, weighed down by lower quotations in Brazil, where the detection of high-pathogenicity avian influenza on a commercial farm in mid-May led to import bans by several major importing countries, resulting in abundant surplus supplies and downward pressure on prices.

The FAO Dairy Price Index, which averaged 153.5 points in May, was up 0.8% from April and 21.5% from a year ago value. According to the organisation, international butter prices, which remained at historically high levels, sustained by strong demand from West Asia and the rest of Asia amid tightening milk supplies in Australia, were the biggest contributor. However, a slowdown in demand for butter of European Union origin limited further price increases.

Meanwhile, cheese prices increased for the second consecutive month, driven by sustained food service demand--particularly in East and Southeast Asia--and tight availabilities in the European Union due to adverse weather and disease outbreaks earlier in the year. Whole milk powder prices climbed an additional 4% from April, underpinned by robust purchases from China and limited increase in supply. Conversely, skimmed milk powder prices declined by 0.2% in May as ample exportable supplies from butter-producing regions offset increased demand from East Asia and North Africa, the report said. End

Reported by Pallavi Singhal

Edited by Rajeev Pai

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