Global food prices dip in May on weaker cereal, sugar markets

Onome Amuge

FAO global food price index falls to 9-month low in October

The FAO Food Price Index (FFPI) registered a slight dip in May 2025, averaging 127.7 points, a 0.8 per cent decrease from April. While prices for dairy products and meat saw increases, these were more than offset by declines in cereals, sugar, and vegetable oils. Despite the monthly reduction, the overall FFPI remained 6.0 per cent higher than its level a year ago, though it sits 20.3 per cent below its peak recorded in March 2022.

Cereal under pressure amid strong harvests

The FAO Cereal Price Index fell by 1.8 per cent in May to 109.0 points, marking an 8.2 per cent decline from its May 2024 level. A sharp drop in global maize prices was the primary driver, influenced by fierce competition and increasing seasonal availability from ongoing harvests in Argentina and Brazil, both proceeding ahead of last year’s pace. Expectations of a record 2025 maize harvest in the United States further contributed to the downward trajectory, which also impacted sorghum and barley.

International wheat prices also saw a moderate decline, attributed to subdued global demand and improving crop conditions across the northern hemisphere, as late-month rainfall eased drought concerns in Europe, the Black Sea region, and the US. In contrast, the FAO All Rice Price Index rose by 1.4 per cent, underpinned by strong demand for fragrant varieties and higher Indica rice prices, partly influenced by currency appreciations in some exporting countries against the US dollar.

Vegetable oils continue descent on ample supply

The FAO Vegetable Oil Price Index averaged 152.2 points in May, down 3.7 per cent from April, though still 19.1 per cent higher year-on-year. This continued decline was a result of lower quotations across palm, rapeseed, soy, and sunflower oils. International palm oil prices fell for a second consecutive month, driven by seasonally larger outputs and export availabilities in Southeast Asia.

Global soyoil prices also decreased amid rising supplies in South America and subdued demand for biofuel feedstock in the US. Rapeseed oil prices dropped in anticipation of improved supplies from the imminent European Union harvest, while sunflower oil prices softened due to weakening global import demand and declining price competitiveness.

Meat, dairy see price hikes

The FAO Meat Price Index edged up by 1.3 per cent to 124.6 points in May, standing 6.8 per cent higher than a year ago. This increase was primarily fuelled by higher international prices for bovine, ovine, and pig meats, which more than offset a decline in poultry. Ovine meat prices rose on strong global import demand from China, the Middle East, and Europe, supporting Oceanic quotations. Pig meat prices were buoyed by strengthening global demand and a sharp increase in German export prices following the country’s regaining of foot-and-mouth disease-free status. Global bovine meat prices reached a new historical high, supported by solid demand and tight exportable supplies from major producers. On the other hand, poultry meat prices declined, weighed down by lower quotations from Brazil after avian influenza detections led to import bans and surplus supplies.

The FAO Dairy Price Index also increased, rising 0.8 per cent to 153.5 points in May, and was 21.5 per cent higher than its value a year ago. International butter prices remained historically high due to robust demand from Asia and the Middle East, alongside tightening Australian milk supplies, though increased EU availability curbed further rises. Cheese prices climbed for a second month, driven by sustained foodservice demand, particularly in East and Southeast Asia, and tight EU availabilities resulting from earlier adverse weather and disease outbreaks. Whole milk powder prices rose an additional 4 per cent on strong Chinese purchases and limited supply growth. Skim milk powder prices, however, saw a marginal 0.2 per cent decline, as ample exportable supplies from butter-producing regions offset increased demand from the Near East and North Africa.

Sugar prices fall for third consecutive month

The FAO Sugar Price Index averaged 109.4 points in May, down 2.6 per cent from April, marking its third consecutive monthly decline and placing it 6.6 per cent below its May 2024 level. The downturn was attributed to weaker global demand for sugar, stemming from concerns over the uncertain global economic outlook and its potential impact on demand from the beverage and food processing industries. In addition, early forecasts anticipating a likely recovery in global sugar production for the 2025/26 season, supported by expectations of larger outputs in India and Thailand following an early monsoon onset, which placed further downward pressure on prices.