Rome: World food commodity prices experienced a slight decline in May, as reductions in vegetable oil prices counterbalanced increases in cereals and sugar, the UN Food and Agriculture Organization (FAO) reported Friday. The FAO Food Price Index, which observes monthly variations in international prices of a basket of globally traded food commodities, averaged 130.8 points in May, showing a 0.2% decrease from its revised April level, although it remained 2.9% higher than the same period last year.

According to Anadolu Agency, the FAO Cereal Price Index saw a 2.6% rise from April and was nearly 5% higher year-on-year. This increase was attributed to elevated prices across key cereals due to escalating fuel and fertilizer costs and weather-related challenges. Wheat prices rose 3.4% month-on-month amid predictions of reduced harvests in major exporting countries such as the US, while maize prices were bolstered by increased import demand and constrained supplies. Rice prices also rose due to weather concerns and higher crude oil prices in key Asian exporting nations.

FAO's Markets and Trade Division director, Boubaker Ben-Belhassen, emphasized the vulnerability of the cereal sector to weather-related risks and disruptions in energy and input markets. He also cautioned that uncertainties impacting crucial trade routes, including the Strait of Hormuz, could reduce fertilizer usage and further strain food prices.

Meanwhile, the FAO Vegetable Oil Price Index decreased by 4.6% from April, marking its first monthly decline this year, largely resulting from reduced palm oil prices. The Meat Price Index saw a slight increase of 0.1%, whereas the Dairy Price Index dropped by 0.5%, led by a decrease in butter prices. The FAO Sugar Price Index rose significantly by 7.5%, driven by expectations that a larger portion of Brazil's sugarcane crop would be diverted to ethanol production.

In a separate Cereal Supply and Demand Brief, the FAO projected global cereal production at 2.98 billion tons for the 2026/27 season, a 2% decrease from the previous year, primarily due to lower wheat harvests. This anticipated decline follows a 6.1% increase in the last season, when global cereal output reached a record 3.04 billion tons. Global cereal utilization is expected to rise by 0.6%, while stocks are forecasted to decrease by 0.3%. World cereal trade is projected to drop by 0.3% to 507.2 million tons, as lower wheat and barley trade volumes outweigh anticipated increases in maize and rice shipments.