FAO Food Price Index Continues to Rise in May
Updated at 1529516031

In May, the FAO Food Price Index reached its highest level since October 2017. This month’s increase was driven by dairy and cereal prices. The Index has risen continually in 2018.

The Cereal Price Index rose 2.4 percent in May to reach 17 percent above its May 2017 levels. At 172.9 points, this Index is now at the highest point seen since January 2015. This month’s increases were driven largely by wheat prices, which rose due to concerns about production in several major exporting countries. Unfavorable conditions in Argentina and Brazil also led to increases in coarse grain prices, while strong demand by some Southeast Asian buyers kept rice prices firm.

The Dairy Price Index also rose in May by 5.5 percent, the fourth consecutive increase.
The Vegetable Oil Price Index declined by 2.6 percent in May, reflecting weaker prices for palm, soybean, and sunflower oils. For soybeans in particular, large global supplies and stocks kept prices down this month.

The Meat and Sugar Price Indices also declined slightly in May.

The latest edition of the AMIS Market Monitor is predicting overall balanced global supplies for the four covered staple crops (wheat, maize, rice, and soybeans), despite some tightening of maize and soybean markets.

Wheat production prospects for 2018 rose slightly in May but remain below 2017 levels. Utilization levels are also expected to increase slightly in 2018-2019, but large build-ups in several countries (particularly China and India) should drive global ending stocks to record highs.

Maize production reached record volumes in 2017 and is expected to fall by around 4 percent in 2018. Increased use of maize for feed and industrial uses will drive utilization up by 2 percent. In addition, global ending stocks for 2018-2019 are anticipated to fall by 16 percent from 2017-2018 stocks. These trends are expected to lead to a slight tightening of the maize market.

Rice production prospects rose slightly in May due to improved forecasts in India and Brazil. Utilization rates are also forecast to increase slightly due to population growth in Asia, but global ending stocks are also expected to increase. This will lead to adequate global supplies.

Soybean production has the potential to reach a record high due to increased production in Argentina and Brazil. Utilization is also forecast to rise, with record or near-record consumption in Brazil, the EU, and the US. Global soybean ending stocks are anticipated to decline slightly from the record highs seen in the mid-2010s.

The AMIS Market Monitor also covers monthly fertilizer prices at the global level. In May, delayed start to the application season in the northern hemisphere led to a slowdown in demand that drove ammonia prices down. Urea and DAP prices also decreased in May as a result of increased production in the Russian Federation and North Africa (urea) and North Africa and the Middle East (DAP). The price of potash and natural gas remained largely unchanged in May, despite the start of the potash application season in the northern hemisphere.