June 12, 2024

 

Global prices of cereals, dairy spiked in May, according to UN food price index

 

The United Nations world food price index rose for a third consecutive month in May, as higher cereals and dairy product prices outweighed drops in prices for sugar and vegetable oils.

 

The UN Food and Agriculture Organization's (FAO) price index averaged 120.4 points in May, up 0.9% from its revised April level, the FAO said on June 7.

 

The May reading was nonetheless 3.4% below the level seen a year earlier.

 

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 Ukraine.

 

The uptick in May was supported by cereal prices rising 6.3% month-on-month amid growing concerns about unfavourable crop conditions curbing 2024 harvests in key producing areas like northern America, Europe and the Black Sea region.

 

Dairy prices increased 1.8% in May from April, the FAO said, underpinned by increased product demand ahead of the summer holidays amid worries that milk production in western Europe may fall.

 

In a separate report on cereals supply and demand, the FAO forecast 2024/25 world cereal production at 2.846 billion tonnes, roughly on a par with 2023/24's record output, as barley, rice and sorghum outputs are seen increasing, offsetting declines in corn and wheat.

 

The FAO warned, however, 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".

 

World cereal utilisation in 2024/25 was seen increasing 0.5% year-on-year to a new record high of 2.851 billion tonnes, the FAO said. World cereal stocks will likely increase 1.5% from their opening levels to a record 897 million tonnes, it added.

 

- Reuters