Global cereal prices tracked by the UN’s Food and Agriculture Organization climbed to a 19-month peak in May, pushed higher by rising fuel and fertiliser costs and worries about shipping through the Strait of Hormuz. The FAO’s broader food index barely moved month to month but remains above last year’s levels, with cereals, rice and sugar showing notable gains. Analysts flagged the possibility that disrupted fertiliser supplies and weather shocks could keep prices volatile. Meat and dairy moved differently, with some segments at record readings and others easing.
Wholesale cereal costs jumped in May, driven mainly by the rising expense of fuel and fertiliser that farmers need to plant and harvest. The FAO noted the cereals sub-gauge climbed 2.6% month-on-month and was up 5% year-on-year, “reflecting higher prices across all major cereals amid higher fuel and fertiliser costs globally and weather-related pressures”, the FAO said. That combination of input inflation and bad weather is an uncomfortable pairing for food security. Prices are reacting not just to harvest prospects but to higher production costs upstream.
Wheat led the move, with global values up sharply on both monthly and annual bases as markets priced in tighter supplies and more expensive logistics. The cereals index averaged 114.3 in May, a level last seen in October 2024, and wheat itself rose 3.4% month-on-month and 7.8% versus the same month last year. Maize also firmed, with more modest gains reflecting competing signals from harvest forecasts and demand. Those changes ripple through animal feed costs and downstream food prices.
Rice values climbed as well, nudged higher by concerns over planting conditions and fuel-linked transport costs in key exporters. The FAO’s All-Rice Price Index rose 2.7% from April as “weather concerns and higher crude oil and derived product prices underpinned quotations in some leading Asian exporting countries”, the UN body said. Those pressures are particularly sensitive in regions where rice is both a staple and a major export earner. Importers watching affordability will be looking for relief in upcoming harvests.
Sugar was one of the sharper movers, with prices jumping as traders fretted about El Niño’s potential effects on output. The FAO said sugar rose 7.5% month-on-month on “concerns that El Niño conditions could adversely affect production in India and Thailand in the year ahead”. That kind of climate risk can suddenly tighten supplies in big producing countries and lift global benchmarks. Meanwhile, palm oil eased on weaker demand expectations, but other vegetable oils stayed tight.
Vegetable oils were mixed, and the overall oils sub-index actually fell for the first time this year, down on a drop in palm oil. The FAO linked that retreat to “due to expectations of weaker global import demand and uncertainty in crude oil markets”, even as rapeseed and sunflower oil prices rose on “tight supply conditions”. Those opposing forces mean global edible oil markets can flip quickly from surplus talk to shortage pricing. Traders and consumers both take note when supplies look uneven across different oil types.
Meat prices moved unevenly, with some categories hitting historical highs while others cooled under abundant supply. “World bovine meat prices rose on the back of robust import demand, particularly from China and the United States of America, while pig meat prices declined, mainly due to lower prices in the European Union amid abundant supplies and subdued import demand,” the FAO said. That split highlights how protein markets react to regional demand swings and trade flows rather than to a single global trend. For exporters, strong demand in a few big markets can lift prices even if other regions are sitting on excess stock.
Dairy headline figures softened slightly as butter lost ground, pulling the dairy index down by 0.5% month-on-month. Even small drops in specific dairy products can temper headline indexes while leaving other dairy lines steady or stronger. The overall picture remains mixed with pockets of heat and pockets of ease across commodities. That pattern keeps market sentiment cautious rather than complacent.
Beyond commodity numbers, FAO officials warned about the risk of supply chain choke points, especially through the Strait of Hormuz where a sizable share of fertiliser shipments transit. Boubaker Ben-Belhassen, the director of the FAO’s Markets and Trade division, said today (5 June): “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.”
Policy makers and traders will be watching planting reports and shipping lanes closely in the weeks ahead, since higher costs for fuel and fertiliser can translate quickly into higher supermarket bills. If fertiliser flows are restricted, growers may cut back on application rates, which would reduce yields and tighten supplies further. That chain reaction is exactly what keeps analysts talking about coordination and contingency planning rather than waiting for prices to normalize on their own. The current snapshot is a reminder that energy, trade routes, and weather all connect to the food sitting on our plates.
