Following on from the United Nations Food and Agriculture Organisation's (FAO) biannual Food Outlook report, which predicted the world food import bill would reach a five-year low in 2015 the May Food Price Index has dropped by 2.4 points (1.4%) from April and as much as 43.6 points (20.7 percent) below the corresponding month last year.

The May average puts the FAO Food Price Index at its lowest level since September 2009.

Cereals and dairy products were responsible for much of last month’s decline, although meat quotations also fell. By contrast, oils and sugar markets firmed but not enough to prevent the six-year low.

FAO Cereal Price Index

The cereal price index averaged 160.8 points in May, 6.4 points (3.8%) less than in April and 46 points (22.4%) 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. The FAO says 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.

FAO Vegetable Oil Price Index

The vegetable oil price index averaged 154.1 points in May, up 3.9 points (or 2.6%) from April, although still 41 points (21%) below the corresponding month last year. The FAO attributes the gain to rising quotations for both palm and soy oils. Quotations for sunflower and rapeseed oil also moved up, reflecting lower than anticipated world production and export supplies.

FAO Dairy Price Index

This index averaged 167.5 points in May, down 5 points (2.9%) from April. Milk powders and butter were the main commodities affected, while cheese remained stable. The FAO reports that 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.

FAO Meat Price Index

The meat index averaged 171 points in May, down 1.7 points (1.0%) 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 pigmeat were little changed. After declining since June 2014, pigmeat meat prices were relatively stable in April and May, with European prices in particular stabilizing.

FAO Sugar Price Index

The sugar price index averaged 189.3 points in May, up 3.7 points (2.0%) from April 2015. 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.