News Insights

Grain driving force behind higher FAO food price index

June 7, 2024 - Alex Jurvillier

The food prices have risen for the third consecutive month. The Food and Agriculture Organization FAO reported that the rising food price index was mainly caused by the significantly increased grain prices. Dairy prices are also on the rise.

The increased indexes of dairy and grain offset the declining indexes of meat, vegetable oils, and sugar. In total, the food price index rises by 1.1 points to 120.4 points. This is higher than the 117.7 points of January 2024, but lower than the 124.7 points of May last year.

The grain price index rose from 111.6 to 118.7 points. This is still considerably lower than the 129.3 points of May last year and also lower than the 119.9 points of January this year. The grain price experienced a dip in March to 110.9 points and now seems to be bouncing back. The prices of all major grains have increased month on month, according to FAO. Wheat saw the most significant increase. The prices were mainly attributed to increased concerns about a disappointing harvest. Additionally, the unrest around the Black Sea contributed to the resurgence.

The dairy price index rose to 126 points in May, 2.2 points higher than April. This is higher than the 118.7 points of January and the 129.3 points of May last year. FAO mentions the increased demand from retail and food service in anticipation of the summer holidays. This, combined with expectations of historically low levels of West European milk production and seasonally reduced milk production in Oceania, is boosting the dairy index.

Vegetable Oils
The index for vegetable oils decreased from 130.9 points to 127.8 points. This is still higher than the level of January when the index was at 122.5 points. Last year in May, the index was at 118.7 points, making it lower. The index primarily decreased due to lower palm oil prices. Soybean, rapeseed, and sunflower oil prices increased slightly.

The meat price index remained almost the same, decreasing by 0.2 points to 116.6 points in May. This is higher than the 109 points of January and the 118.1 points of May last year. International prices for chicken and beef decreased compared to the rising prices of pork and sheep meat, according to FAO.

Sugar prices decreased significantly from 126.6 points in April to 117.1 points in May. This puts the sugar index much lower than the 136.4 points of January 2024 and even lower than the 157.2 points of May last year. The sugar price index has declined for the third consecutive month. The main reason lies with Brazil, which has had a good start to the new season, strengthened by favorable weather conditions. This contributed to an improved outlook on the global supply, as reported by FAO. Increased Brazilian export availability and lower crude oil prices are putting pressure on sugar prices.

Alex Jurvillier

Alex Jurvillier is a market specialist in sugar and cacao at DCA Market Intelligence. He also monitors the milk supply in the most important dairy countries and keeps an eye on developments in food.
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