WORLD food prices declined slightly in May, as vegetable oil and dairy price indices fell, the Food and Agriculture Organization of the United Nations (FAO) reported on Friday.
The FAO Food Price Index averaged 157.4 points in May, down 0.6 percent from April.
While this index published marked the second consecutive monthly decline, the index, which tracks monthly changes in the international prices of a basket of commonly traded food commodities, remained 22.8 percent higher than in May, 2021.
The FAO Vegetable Oil Price Index averaged 229.3 points in May, down 3.5 percent month-on-month. It, however, remained markedly above its year-earlier level. The monthly decline mainly reflected lower prices across palm, sunflower, soy, and rapeseed oils. International palm oil prices weakened moderately in May.
The report said, “Apart from demand rationing, the removal of Indonesia’s short-lived export ban on palm oil exerted additional downwards pressure on prices, although a further price drop was contained by lingering uncertainties over the country’s export prospects.
“Meanwhile, world price quotations for sunflower oil fell from recent record highs, with stocks continuing to accumulate in Ukraine owing to logistical bottlenecks. International soy and rapeseed oil prices also declined somewhat in May, chiefly weighed by sluggish import demand in view of elevated costs in recent months,” the report said.
The FAO Dairy Price Index averaged 141.6 points in May, down 3.5 percent from April, marking the first decline after eight consecutive monthly increases. It was, however, still 16.9 percent higher than its level in May of last year.
The report noted that world prices of all milk products had fallen, with milk powders declining the most, due to lower buying interests on market uncertainties stemming from the continued lockdown in China, despite the persistent global supply tightness.
The FAO Sugar Price Index averaged 120.3 points in May, down 1.1 percent from April, marking the first decline after sharp increases registered in the previous two months. The recent monthly decline in international sugar price quotations was triggered by limited global import demand and good global availability prospects, mostly stemming from a bumper crop in India.
The weakening of the Brazilian Real against the US dollar and lower ethanol prices, resulted in further downwards pressure on world sugar prices. However, uncertainties over the current season’s output in Brazil-the world’s largest sugar exporter, prevented more substantial price declines.
Meanwhile, cereal and meat price indices increased.
The FAO Cereal Price Index averaged 173.4 points in May, up 2.2 percent) from April, and as much as 29.7 percent above its May, 2021 value. International wheat prices rose for a fourth consecutive month, up 5.6 percent in May to average 56.2 percent above their value last year and only 11 percent below the record high reached in March, 2008.
The steep increase in wheat prices was in response to an export ban announced by India amid concerns over crop conditions in several leading exporting countries, as well as reduced production prospects in Ukraine because of the war.
The FAO Meat Price Index averaged 122.0 points in May, up 0.5 percent from April, setting a new all-time high, driven by a steep rise in world poultry meat prices, more than offsetting declines in pig and ovine meat values. In May, poultry meat prices rose, reflecting the continued supply chain disruptions in Ukraine and recent cases of avian influenza amid a surge in demand in Europe and the Middle East.
World pig meat prices fell on high export availabilities, especially in Western Europe, amid lacklustre internal demand and expectations for releasing pork from the EU Commission’s Private Storage Aid scheme.
According to Absa’s Agri Trends: Livestock Report released at the end of May, prices remained firm despite mounting consumer pressures.
It expected chicken prices to follow an upwards trend over the next three months due to a bullish view of the exchange rate, and firm global prices. This was further reinforced by high production costs and firm demand, as consumers demanded poultry products as the most affordable animal protein option.
BUSINESS REPORT