Food Prices Soar for Three Consecutive Months... Grains Up 6.3%

FAO Announces Food Price Index for May

Global food prices have been on the rise for three consecutive months. On the 8th, the Ministry of Agriculture, Food and Rural Affairs announced that the Food and Agriculture Organization (FAO) of the United Nations reported last month's global food price index at 120.4, up 0.9% from the previous month.

The global food price index fell from 117.7 in January to 117.4 in February this year, but then rose for three consecutive months to 119.0 in March, 119.3 in April, and 120.4 last month.

The FAO calculates the food price index monthly for five commodity groups: cereals, oils, meat, dairy products, and sugar. The index is based on the average prices from 2014 to 2016, set at 100 for comparison.

By commodity group, the cereal price index rose 6.3% from the previous month to 118.7 last month. Among cereals, wheat prices increased the most. Concerns about this year’s crop conditions were raised in major exporting countries, and damage to port facilities in the Black Sea region due to the Russia-Ukraine war was cited as the reason.

In the case of corn, prices rose due to pest outbreaks in Argentina and adverse weather conditions in Brazil. International rice prices increased as imports of Indica rice from Indonesia and Brazil were expected to expand.

The dairy price index rose 1.8% to 126.0. Seasonal factors caused milk production to decrease in Oceania, and forecasts predicted that milk production in Western Europe would fall to record lows. Ahead of the summer holiday season, demand for dairy products increased in Western Europe, which was identified as a cause. Increased demand in the Middle East and North America also had an impact.

On the other hand, sugar prices fell 7.5% to an index of 117.1 as harvesting began smoothly in Brazil and export capacity increased. Additionally, the decline in international crude oil prices also influenced this trend.

The oils price index recorded a 2.4% decrease to 127.8. Prices of soybean oil, rapeseed oil, and sunflower oil rose, but the significant drop in palm oil prices caused the overall oils price to fall. The decline in palm oil prices was due to increased production in Southeast Asia from seasonal factors, while international import demand remained weak.

Soybean oil prices rose due to increased demand for biofuels in Brazil. Sunflower oil prices increased as exports from the Black Sea region declined due to seasonal factors, and rapeseed oil prices rose on forecasts of reduced supply.

The meat price index fell 0.2% to 116.6. Poultry prices dropped due to weakened domestic demand in major producing countries, and beef prices declined due to a slowdown in import demand and increased export volumes from Oceania countries. Pork prices rose due to recovering demand and supply shortages.