Global food prices drop in May on falling cereal, sugar, vegetable oil costs: FAO

Global food commodity prices edged lower in May, driven by significant drops in cereal, sugar, and vegetable oil prices, the United Nations Food and Agriculture Organization (FAO) said June 6.

The FAO Food Price Index (FFPI), which tracks monthly price changes across a basket of internationally traded food commodities, averaged 127.7 points, down 0.8% from April.

Despite the month-over-month decline, the index was 6% higher than its level in May 2024 but remained 20.3% below its March 2022 peak, which followed Russia's full-scale invasion of Ukraine. The conflict severely disrupted grain exports from two of the world's top producers.

Sharp decline in cereal prices

Cereals led the overall decline, with the FAO Cereal Price Index falling 1.8% from April and 8.2% from a year earlier.

The drop was primarily driven by plunging maize prices, as robust harvests in Argentina and Brazil, coupled with projections of a record 2025 US crop, eased supply concerns.

Wheat prices also declined due to improved growing conditions across Europe, the Black Sea region and North America.

In contrast, rice prices bucked the trend, with the FAO All Rice Price Index rising 1.4%, supported by strong demand for fragrant varieties and currency-related gains in key exporting nations.

Vegetable oils and sugar post significant declines

The Vegetable Oil Price Index saw a 3.7% decline, reflecting falling prices across palm, soy, rapeseed, and sunflower oils. Palm oil was particularly impacted by seasonal output increases in Southeast Asia, while soy oil prices were pressured by abundant South American supply and weak demand for biofuel feedstocks.

Rapeseed oil prices declined in anticipation of improved yields in the EU, while sunflower oil continued its downward trend amid sluggish global demand.

The Sugar Price Index dropped 2.6%, marking its third consecutive monthly decrease. Weaker demand from food and beverage industries, coupled with economic uncertainty and forecasts for a rebound in global sugar output -- particularly in India and Thailand -- contributed to the decline.

Meat and dairy prices rise

Meat and dairy prices posted modest gains. The Meat Price Index rose 1.3%, driven by higher prices for beef, pork and sheep meat, with beef reaching a new all-time high. Poultry prices, however, fell due to surplus supplies in Brazil following avian influenza-related import bans by several countries.

The Dairy Price Index climbed 0.8%, supported by strong demand in Asia. Butter prices remained near historic highs, while cheese and whole milk powder prices rose on tight supplies and solid import activity, particularly from China. Skim milk powder prices, however, edged lower.

Record cereal production outlook

In a separate report, the FAO forecast record global cereal production of 2.911 billion mt for 2025, up from its previous estimate of 2.848 billion mt and 2.1% higher than 2024.

With output expected to outpace consumption, global cereal stocks are projected to rise 1%, partially reversing last year's decline.

Despite current volatility, the FAO's latest data suggest that easing supply constraints and improved crop prospects could offer some relief to global food markets in the second half of 2025.