ROME - The Food and Agriculture Organization of the United Nations (FAO) released a new report today showing that the international food price index fell in May, driven by sharp declines in quotations for many cereals, vegetable oils and dairy products.

The FAO Food Price Index is a measure of monthly changes in international prices for a basket of food commodities. In May 2023, the FAO Food Price Index averaged 124.3 points, down 2.6% month-on-month and down 22.1% from the record high in March 2022.

The FAO Cereal Price Index fell 4.8% month-on-month in May. Among them, world maize prices fell the most, at 9.8 percent, mainly due to better production prospects and sluggish import demand. World wheat prices fell by 3.5 percent, reflecting the ample supply situation and the impact of the extension of the Black Sea Grains Initiative. In contrast, international rice prices continued to rise in May, mainly supported by purchase demand from Asia and tight supply in some exporting countries, such as Vietnam and Pakistan.

The FAO Vegetable Oil Price Index fell by 8.7% month-on-month in May and was 48.2% lower than the same period last year. International palm oil prices fell significantly month-on-month due to continued weakness in global import purchases, while production expectations in major producing countries have increased. World soybean oil prices fell for the sixth straight month, largely due to a bumper crop in Brazil and larger-than-expected inventories in the United States. Global supplies of rapeseed and sunflower oils are ample and international prices continue to decline.

The FAO Dairy Price Index fell by 3.2% month-on-month in May, mainly due to the sharp drop in international cheese prices, reflecting ample supplies for cheese exports and seasonally higher milk production in the northern hemisphere. However, international quotations for milk powder rebounded, and butter prices also rose.

The FAO Sugar Price Index rose 5.5% month-on-month in May, rising for the fourth consecutive month and nearly 31% year-on-year. The surge in the index was driven by tighter global supplies, concerns over the impact of El Niño on next crop production and strong competition from soybeans and corn that delayed sugar shipments from Brazil. On the other hand, an optimistic outlook for sugar cane planting in Brazil in 2023 and a drop in international crude oil prices limited gains in sugar prices this month.

The FAO Meat Price Index rose by 1.0% month-on-month in May, mainly due to the high import demand for poultry meat in Asia, while the US beef supply continued to be tight.

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Global cereal production is expected to recover soon, stocks will hit record highs

FAO also released its latest Cereal Supply and Demand Brief today, with early forecasts for 2023/24 showing that global cereal production could grow by 1.0% in 2023 to 2,813 million tonnes.

The production growth forecast is largely derived from expected increases in maize, rice and sorghum production, while wheat and barley production are expected to be below 2022 levels.

FAO's first forecast for world cereal consumption in 2023/24 is 2.803 billion tons, an increase of 0.9% from the 2022/23 forecast, mainly driven by growth in feed use (mainly corn), followed by growth in food consumption , especially wheat and rice.

According to FAO's preliminary forecast, global cereal stocks in 2023/24 are expected to increase by 1.7% from the beginning of the period to a record 873 million tons, and the ratio of world cereal stocks to consumption will decline slightly to 30.4%.

World cereal trade in 2023/24 is forecast at 472 million tonnes, close to 2022/23 levels, with increases in world trade in coarse grains and rice expected to offset an expected decline in global wheat trade (the rice trade cycle runs from January December).