Global Food prices increase to highest level in 10-Years

June 4, 2021

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The Food and Agriculture Organization of the United Nations said on Thursday that global food prices rose at their fastest monthly pace in more than a decade during the month of May-2021, the 12th consecutive month of growth, reaching their highest level since September 2011.

FAO also released its first forecast for global cereal production in 2021, projecting nearly 2.821 billion tonnes of production – marking a 1.9% higher than in 2020.

The FAO Food Price Index, which measures monthly changes in a basket of grains, oilseeds, dairy products, meat and sugar, averaged 127.1 points last month from 121.3 in April.

In May, prices rose 39.7% over the same period last year.

The FAO Cereal Price Index rose 6.0% month-on-month in May and 36.6% year-on-year basis. Corn prices are up 89.9% higher than a year ago, but the Food and Agriculture Organization of the United Nations said they prices at the end of the month due to improved production prospects in the United States.

The vegetable oil price index jumped 7.8% in May, mainly due to higher prices for palm, soybean and rapeseed oil. Palm oil prices were supported by slow production growth in Southeast Asia, while prospects for strong global demand, especially in the biodiesel sector, boosted soybean oil prices.

FAO said its sugar index rose 6.8% from the previous month, mainly due to harvest delays and concerns about low yields in Brazil, the world’s largest sugar exporter.

The Meat Index is up 2.2% since April, with quotes for all types of meat supported by higher import purchases from East Asian countries, especially China.

Prices for milk and dairy products increased by 1.8% compared to the previous month and by 28% compared to the previous year. The increase was driven by “strong import demand” for skimmed milk powder and whole milk, while butter prices fell for the first time in nearly a year due to increased exports from New Zealand.

FAO said its forecast for world record grain production this year is underpinned by an expected 3.7% annual increase in corn production. World wheat production rose 1.4% year on year, while rice production rose 1.0%.