By Giulia Petroni

World food prices were broadly stable in May, with increases in cereal and sugar offset by declines in vegetable oils and dairy products, the United Nations' Food and Agriculture Organization said.

The FAO's food price index--which tracks a basket of widely traded food commodities--averaged 130.8 points last month, down 0.2% from its revised April level but still 2.9% higher than a year ago, as supply disruptions in the Middle East and rising fertilizer costs pose a growing threat to global food markets.

The near-total closure of the Strait of Hormuz sent global fertilizer prices sharply higher, raising concerns about a broader shock to the global food system.

The FAO has previously warned the closure could mark the start of a "systemic" agrifood shock that might evolve into a severe global food-price crisis. Farmers are facing increasingly difficult decisions that could shape global food production through 2027, including cutting fertilizer use and accepting lower yields, switching to alternative crops, or absorbing sharply higher costs that could threaten their financial viability, according to the organization.

The risks are compounded by the expected arrival of the El Nino weather system, which could bring drought and disrupt rainfall patterns across key farming regions, further tightening global food supplies.

Cereal prices rose 2.6% last month, with wheat climbing on concerns over shrinking harvests and higher fuel and fertilizer costs, the FAO said Friday. Corn remained supported by strong demand and tighter supplies in Brazil and the U.S., while sorghum and barley increased mainly due to spillover effects. Rice prices also moved higher, lifted by weather worries and rising energy costs in key Asian exporting countries.

Sugar climbed 7.5% in May, the highest level since October of last year, on growing concerns that global supplies could tighten in the months ahead. In Brazil, expectations that more sugarcane would be diverted to ethanol production supported the market, though strong late-April processing helped temper gains. Concerns that El Nino could curb output in India and Thailand next season added to supply concerns and bolstered prices.

Vegetable-oil prices instead fell 4.6%--the first monthly decline since the beginning of the year--dragged by lower palm and soybean oil prices, which outweighed gains in rapeseed and sunflower oils. Palm oil prices fell due to weaker import demand expectations and uncertainty in crude markets, while rapeseed and sunflower oil prices rose on tightening supplies, particularly in the European Union and Ukraine.

Meat prices were almost unchanged, rising by 0.1% from April as higher bovine, ovine, and poultry meat prices were largely offset by lower pig meat prices. Beef and sheep meat gained on strong demand from China and the U.S., while poultry prices edged higher due to firm global demand. In contrast, pig meat prices fell amid abundant supplies and weaker import demand, particularly in the EU. Overall meat prices, however, were still 6.3% higher on year.

Dairy prices fell 0.5% as butter prices continued to decline on improved supply and intensifying competition among exporters, while cheese prices were little changed. Skim milk powder rose on solid import demand from the Middle East, North Africa and Asia, while whole milk powder was mixed, with modest price increases in Oceania offset by lower quotations in Europe.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

June 05, 2026 04:54 ET (08:54 GMT)

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