Food Prices Continue Decline in May, But Concerns about Inflation Remain Strong

The FAO Food Price Index declined by 2.6 percent in May. Compared to May 2022 levels, the Index is 22.1 percent below its all-time high.

The Cereal Price Index fell 4.8 percent month-to-month and 25.3 percent from its May 2022 high. Wheat prices fell by 3.5 percent due to the extension of the Black Sea Grain Initiative and good global production prospects. Maize prices also fell by 9.8 percent due to high global supply forecasts and declining trade. Rice prices, on the other hand, continued their monthly increase based on steady trade and reduced supplies from some major exporters.

The Vegetable Oil Price Index fell 8.7 percent from April and nearly 50 percent from May 2022. Soyoil prices fell for the sixth straight month due to extremely strong production in Brazil and high stocks in the U.S. Palm oil prices also fell significantly in May due to reduced trade and high forecast harvests.

The Dairy Price Index also declined by 3.2 in May, while the Sugar Price Index and Meat Price Index rose by 5.5 and 1 percent, respectively.

The latest AMIS Market Monitor also reflects falling agricultural commodity prices; however, the report also emphasizes the continued risk that food inflation poses for global food security. In many countries, food inflation has reached double digits, impacting poor and vulnerable populations most heavily.

Global 2023 wheat production is expected to fall by 3 percent from its record high in 2022, while wheat utilization is forecast to remain steady from the previous year. Global wheat trade for 2023-2024 is also expected to fall by 3 percent from its previous year’s record due to lower demand from China and the EU and fewer exports from Australia and Ukraine. Global wheat ending stocks for 2024 are expected to fall by 0.7 percent from opening levels.

Maize production for 2023 is expected to increase by 4.2 percent from its 2022 level due to increased harvests in the U.S., the EU, and Brazil. Global maize utilization and trade are also anticipated to increase in 2023-2024. Global maize ending stocks are set to rise by nearly 5 percent from their opening levels due to a significant increase in U.S. stocks.

Global rice production will increase by 1.3 percent from its 2022-2023 levels. Rice utilization is expected to remain mostly stable, with reduced feed use balancing increased food use. Global rice trade is also expected to be steady, while rice ending stocks could reach a record high due to high supplies in India, Pakistan, China, and Indonesia.

Soybean production for 2023-2024 is forecast to reach a record high as well due to improved production in Argentina, Brazil, and the U.S. Soybean utilization is also expected to increase, as is trade, thanks to ample export supplies and increasing import demand. Global soybean ending stocks will also be significantly higher than their opening levels.