Istanbul, June 4 () - Major food commodity prices declined again in May, hitting an almost six-year low as cereal prices fell substantially amid a favourable outlook for this year's harvests, according to UN Food and Agricultural Organisation (FAO).
The FAO Food Price Index fell by 1.4 percent to 166.8 points in May on monthly basis, at its lowest level since September 2009 and as much as 20.7 percent lower than a year earlier.
The Food Price Index is a trade-weighted index that tracks prices on international markets of five major food commodity groups: cereals, meat, dairy products, vegetable oils and sugar.
The FAO Cereal Price Index fell by 3.8 percent to 160.8 points in May, which is 22.4 percent below its level in May 2014. "Ample stocks combined with generally favourable crop outlooks for this year continued to keep international prices under downward pressure" FAO said.
On the other hand, the FAO Vegetable Oil Price Index rose by 2.6 percent to 154.1 points in May, but 21 percent below the corresponding month last year. The gain had been driven by rising quotations for both palm and soy oils, as 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, FAO said.
The FAO Dairy Price Index fell by 2.9 percent to 167.5 points in May on monthly basis, as milk powders and butter were the main commodities affected, while cheese remained stable. "The 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" the FAO said. "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."
Meat prices also fell in May, related to US exports. The FAO Meat Price Index fell by 1.0 percent to 171 points in May. "Overall, international prices of bovine and ovine meat moved lower, while those of poultry and pigmeat were little changed" FAO said. "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 US also influenced prices."
The FAO Sugar Price Index rose by 2.0 percent to 189.3 points in May. The increase in May, which represents the first significant rebound since last October, 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.