The Food and Agriculture Organization of the United Nations (FAO) Food Price Index remained essentially stable in May, as the decline in vegetable oil prices offset increases in cereals and sugar.
The index stood at 130.8 points, marking a marginal decrease of 0.2% compared to April, while remaining up 2.9% on an annual basis.
Rise in cereal prices
The FAO Cereal Price Index rose by 2.6% on a monthly basis and by nearly 5% compared to a year ago.
Wheat prices rose by 3.4% over the month and by 7.8% year-on-year, due to lower harvest estimates in major exporting countries, such as the U.S.
Corn prices rose by 1.9% due to strong import demand, limited available supplies in Brazil and the US, and higher energy prices that are boosting ethanol production.
Rice prices also rose, increasing by 2.7%, due to concerns about weather conditions and higher oil prices.
Decline in vegetable oils
In contrast, the vegetable oil price index fell by 4.6%, marking the first monthly decline in 2026.
Palm oil prices were pressured by expectations of lower global demand, while increased soybean oil supply in South America also contributed to the price decline.
However, rapeseed oil and sunflower oil prices continued to rise due to limited supply.
Sugar and meat on the rise
The sugar price index jumped 7.5% in May, as Brazil is directing a larger portion of its sugarcane production toward ethanol production, while concerns are also mounting over the potential impact of El Niño on crops in India and Thailand.
Meat prices rose marginally by 0.1%, with demand for beef from China and the U.S. remaining strong. In contrast, dairy prices fell by 0.5%, mainly due to the drop in butter prices.
According to the FAO’s new report on cereal supply and demand, global cereal production in the 2026/27 season is expected to decline by 2%, to 2.98 billion tons, mainly due to lower wheat production.
At the same time, global cereal trade is projected to decline by 0.3% to 507.2 million tons, following the strong increase recorded in the previous season.
Risks from the Strait of Hormuz
The FAO notes that food markets remain resilient; however, rising cereal prices highlight the system’s vulnerability to extreme weather events as well as disruptions in the energy and fertilizer markets.
Of particular concern is the uncertainty surrounding key trade routes, such as the Strait of Hormuz, as any prolonged disruptions could increase production costs and put additional pressure on global food prices.