Major food commodity prices declined again in May, according to the UN's Food and Agriculture Organisation (FAO), hitting an almost six-year low as cereal prices fell substantially.
The FAO Food Price Index averaged 166.8 points in May, down 1.4 per cent from April and as much as 20.7 per cent from a year earlier.
There is a favourable outlook for this year's harvests, as the FAO has upgraded its May 2015 forecast for global production of wheat, coarse grains and rice. The Organisation anticipates bigger maize harvests in China and Mexico as well as more abundant wheat harvests in Africa and North America.
The Organisation's latest Cereal Supply and Demand Brief also predicts that global rice output will grow by 1.3 per cent from last year mainly thanks to increases across Asia. However, the forecast is still subject to much uncertainty, as the outcome of the season will very much depend on the unfolding of the season in the next few months.
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.
In May, the Index reached its lowest level since September 2009.
The May decline was driven by a 3.8 per cent monthly drop in the cereal price index, a 2.9 per cent drop in the dairy price index and a one per cent drop in the meat price index.
The sugar price index rose 2.0 per cent, due to temporary delays in Brazil's crushing season despite abundant supplies.
The vegetable oil price index rose 2.6 per cent, partly driven by concerns that the strengthening of El Niño conditions may affect production in Southeast Asia.
On the latest upgraded forecasts, global cereal production in 2015 will be 2.524 billion tonnes, only one per cent below last year's record.
While some inventories will be drawn down, the world cereal stock-to-use ratio is projected to dip marginally, "reinforcing the view of generally stable cereal markets", according to the FAO.