• Monday, June 24, 2024
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Global food prices surge for three consecutive months in May

Global food prices surge for three consecutive months in May

Global food prices rose for a third consecutive month in May, as higher cereals and dairy product prices outweighed decreases in sugar and vegetable oil prices, the Food and Agricultural Organisation (FAO) said on Friday.

The UFAO price index, which tracks changes in the international prices of a set of globally traded food commodities, averaged 120.4 points in May, up 0.9 percent from its revised April level.

The combined average prices of cereal and dairy products drove global food prices by 122 points in the period under review.

Cereal prices increased the most to 119 points in May from 112 points in April, indicating a 6.3 percent rise on a month-on-month basis. However, it declined 8.2 percent from its value a year ago (129 points).

According to FAO, the sharp monthly rise in cereal prices was due to growing concerns about unfavourable crop conditions for the 2024 harvests, which affected crop yields in parts of Europe, Northern America and the Black Sea region.

Also, the international agency said damage to the Black Sea shipping infrastructure exacerbated the upward pressure on prices.

“Maize export prices also increased in May, reflecting production concerns in both Argentina (due to crop damage from the spread of Spiroplasma disease) and Brazil,” it said.

Moreover, spilling effects from global wheat markets also affected maize prices, while the prices of barley and sorghum – two cereal products, also rose in the period under review.

The dairy price index, another key driver of May global food prices, plunged 1.8 percent to 126 points in May from 124 points recorded in April. It increased 3.5 percent above its value in the corresponding period of 2023.

“International price quotations for all the dairy products represented in the index rose in May,” the FAO said.
It noted that increased demand from the retail and food services sector increased dairy price quotations as milk production fell below historic levels in Western Europe.

The FAO’s sugar price index declined 7.5 percent to 117 points in May from 127 points in April. This represents the third consecutive monthly decline, with the index down 25.5 percent (40 points) from its value last year and standing at its lowest level since January 2023.

“The drop in international sugar price quotations in May was mainly driven by the good start of the new harvest season in Brazil, which was bolstered by conducive weather conditions contributing to an improved global supply outlook,” the report said.

Additionally, larger export opportunities from Brazil and lower international crude oil prices further declined sugar prices.

The vegetable price index averaged 128 points in May, declining 2.4 percent on a month-on-month basis from 131 points recorded in April. However, it increased 7.7 percent above its value a year ago.

This was mostly driven by lower palm oil quotations, which offset soybean, rapeseed and sunflower oil prices in the international market.

“International palm oil prices declined for the second consecutive month in May, as outputs across major producing countries in Southeast Asia seasonally increased amid a protracted weak global import demand.”

In May, the meat price index averaged 117 points, declining marginally by 0.2 percent on a month-on-month basis, and 1.3 percent from its value in the same month of 2023.

The FAO said the international prices of poultry and bovine meats fell, while those of pig and ovine increased, noting that increased export opportunities in May amid lower internal demand in some major producing countries, led to a drop in poultry prices.

“By contrast, the month-on-month increase in world pig meat prices was underpinned by a demand uplift and lingering supply tightness, mainly in Western Europe,” the FAO stated.