Global food commodity prices have resumed an easing trend as an index compiled by the United Nations sank to its lowest level in more than two years.

“Significant drops” in the price of cereals, vegetable oils and dairy products led a 2.6% month-on-month decline in May, the Food and Agriculture Organization of the United Nations reported today (2 June). However, the cost of meat, sugar and rice rose during the month.

The FAO Food Price Index unexpectedly halted a 12-month run of declines in April – rising 0.6% – as the renewal of the so-called Black Sea Grain Initiative hung in the balance. Russia finally agreed to a 60-day extension on 17 May, shorter than the 120-day period requested by Ukraine.

Nevertheless, on a rolling 12-month basis, the gauge dropped 19.7% in April and those declines continued in May. The index of five food commodities fell 21.4% to average 124.3, the lowest level since April 2021. It has now retreated 22.1% from an all-time high reached in March 2022.

The FAO Dairy Price Index, a sub-gauge of the benchmark measure, declined 3.2% from April amid a “steep drop in international cheese prices due mainly to ample export availabilities amid seasonally high milk production in the northern hemisphere”. Butter prices, however, rose.

In annual terms, the dairy index was down 17.6%, reaching its lowest average level since September 2021.

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Cereals fell 4.8% on a monthly basis and were down 25.2% on the year. World maize prices dropped 9.8% in May from April, while wheat declined 3.5%, “reflecting ample supplies and the new extension of the Black Sea Grain Initiative”.

The FAO added: “By contrast, international prices of rice continued to increase in May, sustained by Asian purchases and tighter supplies in some exporting countries, such as Vietnam and Pakistan.”

Vegetable oil prices dropped 8.7% month-on-month and decreased 48.2% from a year earlier.

“International palm oil prices fell markedly from April, as protracted weak global import purchases coincided with rising outputs in major producing countries. Rapeseed and sunflower oil prices continued to decline on ample global supplies,” the FAO said.

The FAO Meat Price Index rose 1% May from April, “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”. It was down 4.1% on year.

Sugar prices climbed for a fourth straight month, rising 5.5% from April and up 31% from May 2022.

“The jump reflected tighter global availabilities, rising concerns over the impact of the El Niño phenomenon on next season’s crops, and shipping delays amid strong competition from soybean and maize in Brazil.”