The FAO Food Price Index averaged 204 points in May, representing a 4 percent drop from April prices and the biggest percentage decrease since March 2010. At this level, the Food Price Index is 14 percent below its peak in February 2011.
Cereals prices decreased 1 percent from April, with wheat and corn prices plunging on improved weather conditions and the USDA prediction of a record corn crop. Dairy prices fell the most in May, down 22 points to hit their lowest levels since October 2009. Meat prices are expected to follow this trend in the coming months. While the FAO also predicts world milk and grains production to increase in 2012-2013, these prospects depend on favorable upcoming harvests.
Improved crop outlooks, a strengthening dollar, and growing concerns about the EU debt crisis all contributed to lowering prices. Europe's economic woes and predictions of record corn crops have also played a role in stifling global commodities markets. Corn futures fell 12 percent in [Chicago] in May amid expectations of record world production, while Chicago soybean futures fell 11 percent.