GLOBAL – The United Nations’ Food and Agriculture Organization’s (FAO) Cereal Price Index declined nearly 5% in May, its lowest in two years, underpinned by significant drops in the price indices for vegetable oils and cereals.

According to FAO, the decline was led by a 9.8% drop in corn due to a favorable production outlook along with sluggish demand for imports.

In addition, FAO’s vegetable oil price index slid by 8.7% month on month, reflecting large oilseed supplies and weak demand for palm oil averaging 48% below its year-earlier level.

FAO’s price index, which tracks the most globally-traded food commodities, averaged 124.3 points in May against a revised 127.7 for the previous month, a 2.6 percent dip and as much as 22.1 percent below the all-time high reached in March 2022.

World wheat prices also declined, by 3.5 percent, reflecting ample supplies and the new extension of the Black Sea Grain Initiative.

However, international prices of rice continued to increase in May, sustained by Asian purchases and tighter supplies in some exporting countries, such as Viet Nam and Pakistan.

In its Cereal Supply and Demand Brief, FAO said the early prospects for the 2023-24 season point to a likely 1% increase in global cereal production in 2023 to reach 2.813 billion tonnes.

The predicted increase rests on anticipated gains for corn, rice, and sorghum, while wheat and barley outputs might fall below their 2022 levels.

FAO’s first forecast for world cereal utilization in 2023/24 is now pegged at 2 803 million tonnes, up 0.9 percent from the 2022/23 level, mainly due to higher feed use, largely of maize, followed by growth in food consumption, especially of wheat and rice.

Based on these initial forecasts, global cereal stocks in 2023/24 could rise by 1.7 percent above their opening levels and reach a record level of 873 million tonnes, while the world cereal stock-to-use ratio would decline marginally to 30.4 percent.

World trade in cereals in the 2023/24 marketing season is forecast at 472 million tonnes, near the 2022/23 level, as increased traded volumes of coarse grains and rice (January-December 2024 trade for rice) are foreseen to offset an expected decline in global wheat trade.

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