Global commodity food prices declined for the fourth consecutive month in May as supplies appear strong and demand weakens due to economic contractions triggered by the COVID-19 pandemic. The Food and Agriculture Organization of the United Nations tracks international prices of the most commonly traded food commodities. The FAO Food Price Index averaged 162.5 points in May – 1.9 percent less than the previous month. That marked its worst reading since December 2018.
The FAO Dairy Price Index declined 7.3 percent from April, led by steep declines in quotations for butter and cheese. That was attributed to seasonal-supply factors and reduced import demand. The index averaged 19.6 percent less than its level a year ago. Quotations for milk powders declined only moderately, as poorer prices and renewed economic activity in China fueled strong buying interests.
The FAO Cereal Price Index declined 1 percent from April. International rice prices increased slightly, buoyed by rising Japonica and Basmati quotations. Wheat export prices declined amid expectations of ample global supplies. Coarse-grain prices declined further, with U.S. corn prices now about 16 percent less than their level of May 2019.
The FAO Vegetable Oil Price Index declined 2.8 percent to a 10-month low. While quotations for rapeseed and sunflower oil prices increased, those for palm oil declined for the fourth consecutive month. That reflected subdued global import demand and greater-than-expected production and inventory levels in major exporting countries.
The FAO Meat Price Index declined by 0.8 percent in May, averaging 3.6 percent less than its May 2019 value. Bovine-meat quotations increased while those for poultry and pork continued to decline.
Global cereal production is on track to reach a new record level of about 2.8 billion metric tonnes. That’s 2.6 percent greater than the 2019-2020 timeframe, according to FAO's Cereal Supply and Demand Brief.
The Food and Agriculture Organization’s first forecasts for the 2020-2021 season – based on crop conditions, planting expectations for crops still to be sown, and assuming normal weather for the remainder of the season – point to a comfortable global supply-demand situation for cereals.
Corn accounts for 90 percent of the predicted output increase of all cereals. It is expected to expand from 64.5 million metric tons to 1.2 billion metric tons. Record harvests in North America and Ukraine and near-record harvests in South America are forecast. Rice production is forecast to reach a record high of 508.7 million metric tons, an increase of 1.6 percent from 2019. That is attributed to expected recoveries in China, Southeast Asia, South Asia and the United States.
But wheat production is forecast to decline from 2019. Production declines in the European Union, Ukraine and the United States are expected to more than offset forecast increases in Australia and the Russian Federation.
World-cereal utilization in the year ahead also is forecast to reach a record. It is expected to increase 1.6 percent to about 2.8 billion metric tons; feed, food and industrial uses all are expected to expand. Consumption of corn is expected to increase for livestock feeding in China and for ethanol production in the United States. Rice consumption is forecast to expand by 1.6 percent, with global per capita food intake increasing 0.6 percent in the year to about 119 pounds.
The Food and Agriculture Organization forecasts world-cereal inventories by the end of national marketing seasons in 2021 to reach a record of 927 million metric tons, a 4.5 percent increase from already high opening levels. That would drive the global cereal stock-to-use ratio to 32.9 percent, a comfortably greater level than the 21.2 percent low registered in 2007-2008. China is expected to hold 47 percent of global cereal stocks.
The Food and Agriculture Organization forecasts world cereal trade in 2020-2021 to increase by 2.2 percent to 433 million metric tons, setting a new record. Expansion is expected for all major cereals, led by a 6.2 percent anticipated increase in the global trade of rice. Visit fao.org and search for "FAO Food Price Index" and fao.org and search for "FAO Cereal Supply and Demand Brief" for more information.