Global food prices surge to highest level since 2011

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 127.1 points in May 2021, 4.8% higher than in April and 39.7% above the same period last year. The May increase reflected a surge in prices for oils, sugar and cereals along with firmer meat and dairy prices.

The Cereal Price Index averaged 133.1 points in May, up 6% from April and 36.6% above its May 2020 value. Among the major cereals, international maize prices rose the most, gaining 8.8% in May, reaching 89.3% above their value last year and their highest level since January 2013. Downgraded production prospects for Brazil added pressure to already tight global supplies amid sustained strong demand. However, maize prices started to retreat at the end of May, mostly on higher production prospects in the United States. International barley and sorghum prices also increased in May, rising by 5.4% and 3.6%, respectively. Following a surge in wheat prices in early May, improved crop conditions, particularly in the European Union and the United States, led to sharp price declines by the end of the month. However, wheat prices still averaged 6.8% up from April and 28.5% above May 2020. International rice prices held steady in May.

The Vegetable Oil Price Index averaged 174.7 points in May, gaining 7.8% month-on-month and marking a 12th 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. Soy oil prices were driven higher due to prospects of robust global demand, especially from the biodiesel sector.

The Dairy Price Index averaged 120.8 points in May, up 1.5% from April, and 28% above its level of one year ago. However, the index is still 22.8% below its peak value reached in December 2013. The May increase was led by solid import demand for skim and whole milk powders, while butter prices declined for the first time in almost a year on increased export supplies from New Zealand. Cheese quotations also strengthened, mostly due to lower supplies from the European Union amid strong demand.

The Sugar Price Index averaged 106.7 points in May, up 6.8% from April, marking the second consecutive monthly increase and the highest level since March 2017. The rise in international sugar price quotations was due largely to harvest delays and concerns over reduced crop yields in Brazil, the world's largest sugar exporter, even as large export volumes from India contributed to easing the price surge.

The Meat Price Index averaged 105.0 points in May, up 2.2% from April, registering the eighth monthly increase and lifting the index 10% above its level of one year ago, but still nearly 12% below its peak reached in August 2014. In May, price quotations for all meat types rose due to a faster pace of import purchases by China, as well as rising internal demand for poultry and pig meats in the leading producing regions.