World food prices dip in May as cereal, sugar and vegoils drop

PARIS (Reuters) - Global food commodity prices declined in May, driven by marked drops in cereal, sugar, and vegetable oil prices, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 127.7 points in May, reflecting a 0.8% decrease from the April figure. 

The May reading was up 6% from a year earlier but over 20% below a March 2022 peak following Russia's full-scale invasion of Ukraine that started a devastating war between two of the world's leading grains producers.

The FAO cereal price index fell 1.8% month-on-month, led by a sharp drop in global maize prices. Strong harvests and ample supplies in Argentina and Brazil, along with expectations of a record crop in the United States, weighed on prices.

Wheat prices edged lower due to improved crop conditions in the northern hemisphere.

By contrast, rice prices rose 1.4%, supported by firm demand for fragrant varieties and currency movements.

Vegetable oil prices declined 3.7% from April, with declines across all major oils. Palm oil prices fell due to seasonal output increases in Southeast Asia. Soy oil prices dropped on higher South American supplies and weak demand for biofuel.

Rapeseed oil eased on improved European Union supply prospects, while sunflower oil declined amid weak global demand.

The FAO sugar price index decreased by 2.6%, reflecting concerns over the global economic outlook, weaker demand from food and beverage industries, and expectations of a production recovery next season.

Meat prices rose 1.3% from April. Beef, pork and sheep meat prices increased, with beef reaching a record high. Poultry prices declined, pressured by surplus supplies in Brazil following import restrictions linked to a bird flu outbreak.

The FAO dairy price index rose 0.8%, supported by strong demand from Asia. Butter prices remained at historic highs, while cheese and whole milk powder prices also increased.

In a separate report, the FAO forecast record global cereal production of 2.911 billion metric tons in 2025, up from 2.848 billion in its previous estimate and 2.1% above 2024.

With production expected to surpass consumption, global cereal stocks are anticipated to grow by 1.0%, partially recovering from last year's contraction.

(Reporting by Sybille de La Hamaide; Editing by Jan Harvey and Tomasz Janowski)