FAO Food Price Index falls in May on lower cereal, vegetable oil and sugar prices

Global Food Prices: A Mixed Bag in May 2025 The FAO Food Price Index (FFPI) saw a slight dip in May 2025, settling at an average of 127.7 points. This marks a 0.8% (1.0 point) decrease from April, primarily driven by falling prices in cereals, sugar, and vegetable oils. While dairy and meat prices did rise, their gains weren't enough to offset the overall decline. Despite this monthly drop, the FFPI remains 6.0% (7.2 points) higher than last year but is still a notable 20.3% (32.6 points) below its March 2022 peak. Cereal Market Shifts The FAO Cereal Price Index in May stood at 109.0 points, down 1.8% from April and 8.2% lower than May 2024. A significant factor was the sharp decline in global maize prices, fueled by robust competition and increased supplies from early harvests in Argentina and Brazil. Prospects of a record 2025 maize harvest in the U.S. further pushed prices down. Sorghum and barley prices also fell, as did international wheat prices (though more moderately) due to subdued demand and improving crop conditions in the Northern Hemisphere. Notably, rainfall towards the end of May eased drought concerns in parts of Europe, the Black Sea, and the U.S. Conversely, the FAO All Rice Price Index edged up by 1.4%, driven by strong demand for fragrant varieties and higher Indica rice prices, partly influenced by currency appreciation in some exporting countries. Vegetable Oils Continue to Decline The FAO Vegetable Oil Price Index averaged 152.2 points in May, dropping 3.7% from April. This is its second consecutive monthly decline, though it's still 19.1% higher than last year. The fall was broad-based, affecting palm, rapeseed, soy, and sunflower oils. Palm oil prices notably decreased due to larger seasonal outputs and export availabilities in Southeast Asia. Global soyoil prices also fell, influenced by increased South American supplies and weaker biofuel demand in the U.S. Rapeseed oil prices dropped with improved supply prospects from the upcoming EU harvest, while sunflower oil prices were hit by weakening import demand. Meat Market Gains Strength The FAO Meat Price Index rose to 124.6 points in May, up 1.3% from April and 6.8% higher than a year ago. This increase was primarily driven by higher international prices for bovine, ovine, and pig meats, which more than compensated for a decline in poultry prices. Ovine meat prices climbed due to strong global import demand, especially from China, the Middle East, and Europe. Pig meat prices also rose, bolstered by strengthening global demand and a sharp increase in German export prices after the country regained its foot-and-mouth disease-free status. Global bovine meat prices even reached a new historical high amid solid demand and tight supplies. However, poultry meat prices declined, largely due to lower quotations in Brazil following import bans from several countries after an avian influenza detection, leading to surplus supplies. Dairy Sees Continued Growth The FAO Dairy Price Index reached 153.5 points in May, increasing by 0.8% from April and a significant 21.5% higher than last year. International butter prices remained at historically high levels, supported by strong demand from Asia and the Middle East despite tightening Australian milk supplies. However, slower demand for EU-origin butter limited further increases. Cheese prices saw a second consecutive monthly rise, driven by sustained foodservice demand (especially in East and Southeast Asia) and tight EU availabilities due to earlier weather issues and disease outbreaks. Whole milk powder prices climbed an additional 4% due to robust purchases from China and limited supply growth. Conversely, skim milk powder prices marginally declined (-0.2%) as ample exportable supplies from butter-producing regions offset increased demand from the Near East and North Africa. Sugar Prices Sweeten the Decline The FAO Sugar Price Index averaged 109.4 points in May, a 2.6% drop from April. This marks its third consecutive monthly decline and places it 6.6% below its May 2024 level. The primary driver was weaker global demand for sugar, fueled by concerns over the uncertain global economic outlook and its potential impact on the beverage and food processing industries. Additionally, early forecasts predicting a likely recovery in global sugar production for 2025/26, particularly from India and Thailand due to an early monsoon season, exerted further downward pressure on prices.