FAO warns of weaker global cereal harvests as grain prices rise
The organisation's Food Price Index averaged 130.8 points in May, down 0.2% from April but still 2.9% higher than a year earlier. While lower vegetable oil prices helped keep the overall index relatively stable, cereal and sugar prices continued to climb.
Cereal prices continue to rise
The cereal price index increased by 2.6% from April and was nearly 5% higher than a year ago.
Wheat prices rose 3.4% month-on-month and 7.8% year-on-year, supported by expectations of smaller harvests among major exporters, including the United States, where winter wheat crop conditions are among the weakest seen in decades.
US Hard Red Winter wheat prices in May were 28% higher than a year earlier.
Maize prices increased by 1.9%, driven by stronger import demand, tighter supplies in Brazil and the United States, and higher energy prices that boosted ethanol demand.
The all-rice price index rose 2.7% from April as weather concerns and higher crude oil prices supported quotations in several major Asian exporting countries.
"While global food commodity markets have remained broadly resilient, rising cereal prices underscore vulnerability to weather-related risks and disruptions in energy and input markets.
"Continued uncertainty affecting key trade routes, including the Strait of Hormuz, could reduce fertiliser use and place additional pressure on food prices, highlighting the need for coordinated international action,” said Boubaker Ben-Belhassen, director of FAO's markets and trade division.
Mixed performance across food commodities
The vegetable oil price index declined by 4.6%, marking its first monthly decrease of the year.
Palm oil prices fell on expectations of weaker import demand and uncertainty in crude oil markets, while increased exportable supplies weighed on soyoil prices in South America. Rapeseed and sunflower oil prices, however, increased due to tighter supplies.
The meat price index edged up 0.1%, supported by stronger demand for bovine meat, particularly from China and the United States. Pig meat prices declined due to abundant supplies in the European Union and weaker import demand.
The dairy price index fell by 0.5%, led by lower butter prices. Cheese prices remained largely stable, while skim milk powder prices increased.
The sugar price index rose 7.5% during the month. The increase was linked to expectations that a smaller share of Brazil's sugarcane crop would be allocated to sugar production, as well as concerns that El Niño conditions could affect future production in India and Thailand.
Global grain output expected to decline
FAO forecasts world cereal production to decline by 2% in the 2026/27 season to 2.982 billion tonnes.
The expected decrease follows a record harvest of 3.043 billion tonnes in 2025/26, which contributed to a 9.5% increase in global cereal stocks.
Global cereal utilisation is expected to increase by 0.6% in the coming season, while cereal stocks are forecast to contract by 0.3%, largely due to lower rice inventories. The global cereal stock-to-use ratio is projected to remain relatively stable at 31.7%.
Trade outlook weakens
After expanding by 4.8% in 2025/26, global cereal trade is forecast to decline by 0.3% to 507.2 million tonnes in the year ahead.
According to FAO, lower wheat and barley trade volumes are expected to outweigh projected increases in maize and rice shipments.
The organisation also noted that higher energy and fertiliser costs, together with uncertainty surrounding key shipping routes such as the Strait of Hormuz, remain important risks for global agricultural markets and food price stability.