The United Nations world food price index has risen for the third consecutive month in May. This comes as higher cereals and dairy product prices outweighed drops in prices for sugar and vegetable oils.
The U.N. Food and Agriculture Organization's (FAO) price index averaged 120.4 points in May, up 0.9% from its revised April level. However, the reading was 3.4% below the level seen a year earlier. The FAO tracks the most globally traded food commodities.
As per Reuters, the FAO index hit a three-year low in February as food prices continued to ease off from a record peak set in March 2022, following Russia's invasion of fellow crop export major Ukraine.
The prices of cereal rose 6.3% month on month due to growing concerns of unfavourable crop conditions curbing 2024 harvests in key producing areas like northern America, Europe and the Black Sea region. In May, diary products prices increased 1.8% due to increased product demand ahead of the summer holidays amid worries that milk production in western Europe may fall.
Meanwhile, FAO's May sugar index fell sharply, decreasing 7.5% on a monthly basis. Vegetable oil prices also declined 2.4% for the month, as palm oil quotations fell amid rising seasonal output.
The FAO for 2024-25 has forecasted that world cereal production may reach 2.846 billion roughly on a par with 2023-24's record output, as barley, rice and sorghum output is seen increasing, offsetting declines in maize and wheat. The FAO, however warned that the "recent adverse weather conditions in the Black Sea region will likely result in a downgrade in world wheat production, a possibility not yet reflected in the forecast"
As per FAO, World cereal utilisation in 2024-25 was seen increasing 0.5% year-on-year to a new record high of 2.851 billion tons and the stock will likely increase 1.5% from their opening levels to a record 897 million tons.
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