Global food commodity prices hit two-year low

With the leading supermarkets starting to lower the price of some everyday basics to reflect falling commodity costs, global data released today (2) suggests this trend could continue in the months ahead.

The UN’s Food and Agriculture Organization’s (FAO) price index, which tracks the most globally-traded food commodities, fell again last month to its lowest level in two years, as sharp falls in the cost of vegetable oils, cereals, and dairy outweighed increases for sugar and meat.

The Index for May averaged 124.3 points against a revised 127.7 for the previous month. The latest reading marked the lowest since April 2021 and meant the overall index was now 22.1 per cent below an all-time peak reached in March 2022 following Russia’s invasion of Ukraine.

FAO’s cereal price index dropped by nearly 5 per cent in May from the prior month, pressured by ample supply prospects and the extension of the Black Sea Grain Initiative allowing shipments from Ukraine.

But international rice prices continued to increase in May, partly due to tighter supplies in some exporting countries, said FAO. The agency last month expressed concern over rising prices of the staple.

FAO’s vegetable oil price index slid almost 9 per cent month on month, reflecting large oilseed supplies and weak demand for palm oil, while global dairy prices eased over 3 per cent amid a seasonal upturn in northern hemisphere milk output, the agency said.

Sugar prices, in contrast, showed a 5.5 per cent increase from April in a fourth straight monthly gain, as concerns over the El Nino weather pattern added to global supply risks, FAO said.

However, improving weather conditions in Brazil and lower crude oil prices have curbed sugar markets, it added. Sugar futures ended May lower after a 12-year high in late April.