The UN’s Food and Agriculture Organization (FAO) Food Price Index continued its downward trend in May, dropping 1.4 percent to 166.8 from the previous month, and 20.7 percent below its level in May 2014. Major food commodity prices hit a n early 6-year low as cereal prices fell substantially amid a favorable outlook for this year’s harvests.

The Cereal Price Index averaged 160.8 points in May, 3.8 percent less than in April and 22.4 percent below its level in May 2014. Ample stocks combined with generally favorable crop outlooks for this year continued to keep international prices under downward pressure. Subdued trade prospects, with many importing countries postponing purchases to later this year, also contributed to the general decline in prices. The May average was the lowest since July 2010. 

The Vegetable Oil Price Index averaged154.1 points in May, up 2.6 percent from April and 21 percent below the corresponding month last year. The gain has been driven by rising quotations for both palm and soy oils. Palm oil prices strengthened mainly on account of increased concerns about possible El Niño developments which could affect production in Southeast Asia, while soy oil values firmed primarily on resumed import demand—by China in particular. Quotations for sunflower and rapeseed oil also moved up, reflecting lower than anticipated world production and export supplies.

The Dairy Price Index averaged 167.5 points in May, down 2.9 percent from April. Milk powders and butter were the main commodities affected, while cheese remained stable. Lingering low prices characterizing world markets reflects large unsold stocks in New Zealand and the buildup of export supplies in Europe, as production in the northern-hemisphere reaches its seasonal peak.  Uncertainty over the level of China’s purchases of milk powder during 2015 continues to weigh on the market, although lower prices have stimulated buyer interest in the Middle East and North Africa.

The Meat Price Index averaged 171 points in May, down 1 percent from its revised April value. Generally lower prices for meat exports from the United States continue to weigh on the Index. Overall, international prices of bovine and ovine meat moved lower, while those of poultry and pig meat were little changed. In the case of poultry meat, import restrictions imposed by some countries due to outbreaks of highly infectious avian influenza in some states in the United States also influenced prices.

The Sugar Price Index averaged 189.3 points in May, up 2 percent from April 2015. The increase represents the first significant rebound since last October and was mainly due to a slow start of the crushing season in Centre/South Brazil, as raw sugar prices remain under the pressure of large supplies and growing surpluses in 2014/15.