World food prices rose sharply in May

In May, world food prices recorded the sharpest month-on-month rise in more than a decade. The aggregate index, which monitors the prices of cereals, vegetable oils, dairy products, meat and sugar on international markets, rose by 4.8 percent month on month to 127.1 points. In year-on-year comparison, it even increased by 39.7 percent. The cereal price index rose by six percent month on month in May. However, the FAO predicts that global cereal production will increase by 1.9 percent this year to nearly 2.821 billion tons. That would set a record. The vegetable oil price index rose by 7.8 percent month on month, mainly due to higher prices of palm, soybean and rapeseed oils. The sugar price index rose by 6.8 percent, mainly due to harvest delays and fears of declining crop yields in Brazil, the world's largest sugar exporter. The meat price index rose 2.2 percent in May, driven by the faster pace of imports to China and other East Asian countries. The price index for dairy products rose 1.8 percent, the FAO said. The published overview of supply and demand for cereals offered the FAO's first forecast for world cereal production in 2021, which is now set at almost 2,821 million tonnes. This is a new record and an increase of 1.9 million compared to 2020, led by the expected 3.7 percent year-on-year growth in corn production. The total consumption of food produced from cereals should grow along with the growth of the world's population, while the increased use of wheat for animal feed is also expected. Based on these forecasts, world cereal stocks are expected to increase by 0.3 percent to 811 million tonnes at the end of the 2021/22 harvest season. The expected modest increase would end three consecutive years of decline, but the ratio of world reserves to consumption is projected to fall further to 28.1 percent. FAO's first forecast for world cereal trade in the new season indicates an increase of only 0.3 percent against the high level estimated for 2020/21, when trade is expected to increase by up to 6.3 percent to a maximum of 468 million tonnes.