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The United Nations Food and Agriculture Organization (FAO) released its monthly Food Price Index for May, showing that a significant decline in vegetable oil prices helped partially offset gains in cereal and sugar prices, resulting in a modest overall month-on-month decrease in the composite index.
The FAO Vegetable Oil Price Sub-Index fell by 4.6% in May compared to April, marking its third consecutive monthly decline and bringing the index to its lowest level since the beginning of the year. The decline was primarily driven by sharply lower crude palm oil prices on international markets, which fell amid concerns about weak demand from key importing countries and the potential supply implications of Indonesia's new export policy.
Sunflower oil prices also declined during the month, reflecting continued pressure from large available supplies from major Black Sea producers, despite the disruption to Ukrainian export logistics caused by ongoing Russian attacks on port infrastructure.
The vegetable oil price decline was partially offset by increases in the FAO Cereal Price Sub-Index, driven by renewed concerns about wheat production prospects in key growing regions, and a rise in the Sugar Sub-Index linked to tightening supply forecasts for the current season.
FAO economists noted that while the overall food price index remains elevated by historical standards, the continued decline in vegetable oil prices — which represent a major input cost for food manufacturers globally — is providing some relief to food price pressures in both developed and developing economies.
