Global food prices at highest level in 10 years

Global food commodity prices rose in May at their fastest monthly rate to their highest value since September 2011, led by oils, sugar and cereals, the Food and Agriculture Organisation of the United Nations (FAO) has said.

Details of this were highlighted in the FAO Food Price Index report released on Thursday.

The index tracks the international prices of the most commonly traded food commodities.

The FAO Food Price Index averaged 127.1 points in May 2021, 4.8 per cent higher than in April and as much as 39.7 per cent above the same period last year.

“The May increase represented the biggest month-on-month gain since October 2010.

“It also marked the twelfth consecutive monthly rise in the value of the food prices Index to its highest value since September 2011, bringing the Index only 7.6 per cent below its peak value of 137.6 points registered in February 2011.

“The sharp increase in May reflected a surge in prices for oils, sugar and cereals along with firmer meat and dairy prices,” it said.

The report said the FAO Vegetable Oil Price Index averaged 174.7 points in May, gaining 7.8 per cent month-on-month and marking a twelfth consecutive monthly rise.

“The continued strength of the index mainly reflects rising palm, soy and rapeseed oil values.

“International palm oil quotations remained on an upward trajectory in May and reached their highest level since February 2011, as slow production growth in Southeast Asian countries together with rising global import demand, kept inventories in leading exporting nations at relatively low levels.

“As for soy oil, prospects of robust global demand, especially from the biodiesel sector, lent support to prices, while international rapeseed oil values were underpinned by continued global supply tightness,” the report said.

According to the report, the FAO Sugar Price Index averaged 106.7 points in May, up 6.8 per cent from April marking the second consecutive monthly increase and the highest level since March 2017.

“The rise in international sugar price quotations was mostly related to harvest delays and concerns over reduced crop yields in Brazil, the world’s largest sugar exporter, as the prolonged dry weather conditions impacted crop development.

“Additional support was provided by higher crude oil prices and a further strengthening of the Brazilian Real against the US dollar, which tends to restrain shipments from Brazil.

Large export volumes from India, however, contributed to easing the price surge and prevented larger monthly price gains,” it said.

Other indices rise

In the report, FAO Cereal Price Index averaged 133.1 points in May, up 6.0 per cent from April and 36.6 per cent above its May 2020 value.

Among the major cereals, international maize prices rose the most, gaining 8.8 per cent in May, reaching 89.3 per cent above their value last year and their highest level since January 2013.

It said towards the end of the month, maize prices started to retreat, mostly in expectation of higher production prospects in the United States.

“International barley and sorghum prices also increased in May, rising by 5.4 per cent and 3.6 per cent, respectively.

“Wheat prices still averaged 6.8 per cent up from April and 28.5 per cent above May 2020.

“While International rice prices held steady in May, with logistics and shipping costs keeping trading activity subdued through the month,” the report said.

It said the FAO Meat Price Index averaged 105.0 points in May, up 2.2 per cent from April, registering the eighth monthly increase and lifting the index 10 per cent above its level of one year ago, but still, nearly 12 per cent below its peak reached in August 2014.

“In May, price quotations for all meat types represented in the index rose, principally underpinned by a faster pace of import purchases by East Asian countries, mainly China.

“Tightening global supplies also provided price support across all meat products, reflecting multiple factors ranging from slaughter slowdowns in the cases of bovine and ovine meats to rising internal demand for poultry and pig meats in leading producer regions,” it said.

The report said the FAO Dairy Price Index averaged 120.8 points in May, up 1.5 per cent from April, marking one year of uninterrupted increases and lifting the value 28 per cent above its level of one year ago.

“However, the index is still 22.8 per cent below its peak value reached in December 2013.

In May, international quotations for skim milk powder rose the most, reflecting solid import demand amid limited spot supplies from the European Union, and those for whole milk powder increased on high import purchases, especially by China, despite New Zealand’s offer of large sales.

“By contrast, butter prices fell on increased export supplies from New Zealand, marking the end of an eleven-month long price rally,” it said.



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