ITALY — World food commodity prices saw a modest decline in May, dragged lower by declines in the vegetable oil, dairy and sugar price indices, the Food and Agriculture Organization of the United Nations (FAO) reported.

The Food and Agriculture Organization’s (FAO) food price index, which tracks the most globally traded food commodities, averaged 157.4 points in May 2022, down 0.6% from April. This is its second consecutive monthly decline after hitting a record high in March.

Despite the monthly decline, the May 2022 index remained 22.8% higher than in May 2021, pushed up in part by concerns over the impact of the Russian invasion of Ukraine.

The vegetable oil price index dropped 3.5% from April, reflecting lower prices across palm, sunflower, soy and rapeseed oils, and further subdued by Indonesia’s decision to lift a short-lived export ban on palm oil.

“Export restrictions create market uncertainty and can result in price spikes and increased price volatility, the decrease in oilseeds prices shows how important it is when they are removed and let exports flow smoothly,” said Máximo Torero Cullen, chief economist of the FAO.

The dairy index also dropped by 3.5% month-on-month, with the price of milk powders declining the most due to market uncertainties tied to the continued COVID-19 lockdowns in China.

Meanwhile, the FAO Meat Price index rose 0.6% in May, setting a new all-time high. A steep increase in poultry prices offset the falling pig meat prices and stable world bovine meat prices.

Issuing its first forecast for global cereal production, FAO predicted declines for maize, wheat and rice production, while barley and sorghum outputs were seen increasing.

“The forecasts are based on conditions of crops already in the ground and planting intentions for those yet to be sown,” FAO said.

According to the organization’s latest Cereal Supply and Demand Brief, global cereal production is expected to drop in the 2022/23 season for the first time in four years, to 2.784 billion tonnes, down 16 million tonnes from the record output estimated for 2021.

The cereal price index increased by 2.2% from the previous month, with wheat posting a 5.6% month-on-month gain. Year-on-year, wheat prices were up 56.2%.

The FAO attributed the steep increase in wheat prices to an export ban announced by India and concerns over crop conditions in several leading exporting countries as well as reduced production prospects in Ukraine due to the war.

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