Global Food Prices Plunge for Second Month

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Global Food Prices Plunge for Second Month

The UN’s Food & Agriculture Organization said that world food prices dropped for the second month in May as the cost of grains, dairy products and vegetable oils fell.

A gauge of 55 food items lost 1.2% to 207.8 points from a reaffirmed 210.3 points in April, an online report from the UN agency showed today. Global food prices have dropped 3.2% from the previous year.

Dairy prices are on a decline course from a record high in February against the backdrop of soaring production in New Zealand, where a last year drought hit milk output, according to Bloomberg. The European Union and the US are also experiencing milk price declines.

“The market for dairy commodities is adjusting, following a period of exceptionally high prices in 2013 and early 2014 caused by limited export supplies. The production outlook has improved,” stated the FAO.

A measure of diary costs fell 5% to 238.9 points in May after a 6.3% month-to-month tumble in April. New Zealand’s milk collection added 7.7% in the 10 months towards the end of April, as reported by Fonterra Cooperative Group Ltd.

Spot prices for US Class III milk lost 7.2% in May after jumping to a record in April, data from the US Department of Agriculture shows. Prices of whole milk powder plunged 8.5% in an auction that took place in Jun 3, the eighth loss in a row since February 4, according to GlobalDairyTrade.

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The FAO’s report released today shows that a measure of grain prices dropped 1.2% from April to 204.4 points.

A FAO gauge of vegetable oil prices slid 1.8% in May to 195.3 points. Price of oil extracts from palm, rapeseed and soybean dropped, the UN agency wrote.

As Business Standard wrote, only sugar ascended, adding 3.7% on fears that bad weather in Latin America in the second half of 2014 would hamper harvests.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com