– The United Nations world food price index rose for the third consecutive month in May, reaching 120.4 points, a 0.9% increase from April, driven by higher prices for cereals and dairy products.

– Cereal prices surged 6.3% month-on-month due to concerns over unfavorable crop conditions in North America, Europe, and the Black Sea region, while dairy prices increased by 1.8% amid rising demand and potential declines in Western European milk production.

– Despite the overall increase, the FAO’s sugar index fell by 7.5% due to a strong harvest in Brazil, and vegetable oil prices dropped by 2.4% as palm oil prices declined with rising seasonal output.

The United Nations world food price index rose for the third consecutive month in May, driven by higher prices for cereals and dairy products, despite declines in sugar and vegetable oil prices.

The U.N. Food and Agriculture Organization (FAO) reported that its price index, which monitors the most globally traded food commodities, averaged 120.4 points in May, a 0.9% increase from April’s revised level. However, this figure remains 3.4% below the level from a year earlier.

The FAO index hit a three-year low in February as food prices eased from the record peak set in March 2022 following Russia’s invasion of Ukraine.

The May increase was fueled by a 6.3% month-on-month rise in cereal prices, spurred by concerns over unfavorable crop conditions impacting 2024 harvests in key areas such as North America, Europe, and the Black Sea region.

Dairy prices rose 1.8% in May from April, driven by higher product demand ahead of the summer holidays and concerns about a potential decline in milk production in Western Europe. Conversely, the FAO’s sugar index dropped sharply by 7.5% due to a strong start to the new harvest in top producer Brazil. Vegetable oil prices fell by 2.4%, with palm oil prices declining amid increased seasonal output.

In a separate report on cereals supply and demand, the FAO forecasted 2024/25 world cereal production at 2.846 billion metric tons, roughly matching the record output of 2023/24. Increases in barley, rice, and sorghum output are expected to offset declines in maize and wheat.

However, the FAO cautioned that adverse weather conditions in the Black Sea region could lead to a downgrade in global wheat production, a risk not yet reflected in the forecast.Global cereal utilization for 2024/25 is projected to rise by 0.5% year-on-year to a record high of 2.851 billion tons.

Additionally, world cereal stocks are expected to increase by 1.5% from their opening levels, reaching a record 897 million tons.