Global food prices hit 2-year low in May

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By Damilola Odifa

The United Nations Food Agency has confirmed that the global food price index declined last month (May 2023) to the lowest in two years, as a sharp fall in the prices of vegetable oils and cereals outweighed the rise in sugar and other commodities. The index in May averaged 124.3 points, a 2.6% decrease from April and as much as a 22.1% decline (35.4 points) below the all-time high reached in March 2022.

Significant drops in the price of cereals, vegetable oils and dairy products led to a 2.6% decline in May, the Food and Agricultural Organisation (FAO) also confirmed in its May report. However, the cost of meat, sugar and rice still rose during the month. Grains and cereals, the largest component in the index, were down 4.8% from the previous month, led by a 9.8% drop in world maize quotations due to a favourable production outlook in the face of a sluggish import demand. Global wheat prices also declined by 3.5%, “reflecting ample supplies and the new extension of the Black Sea Grain Initiative,” the report said.

“By contrast,” the FAO explained, “international prices of rice continued to increase in May, sustained by Asian purchases and tighter supplies in some exporting countries, such as Viet Nam and Pakistan.” The vegetable oil price index dropped by 8.7% in May, averaging 48.2% below its earlier year level. “International palm oil prices fell markedly from April, as protracted weak global import purchases coincided with rising outputs in major producing countries,” the FAO said.

Soyoil prices fell for the sixth consecutive month amid a bumper soybean crop in Brazil and higher-than-expected stocks in the United States of America. Rapeseed and sunflower oil prices continued to decline on ample global supplies. The main exceptions to the trend were sugar prices, which climbed for a fourth straight month, rising 5.5% from April and up 31% from May 2022.

The jump reflected tighter global availability, rising concerns over the impact of the El Niño phenomenon on next season’s crops, and shipping delays amid strong competition for soybean and maize in Brazil. The meat price index also rose in May, increasing by 1.0%, “driven primarily by a steady high Asian import demand for poultry meat and persistent supply tightness for bovine meat in the United States of America. The index has been falling since January this year, until prices rose in April for the first time, amid increases in world quotations for sugar, meat and rice.

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