World food prices drop to 17-month low as pandemic limits market demand

World food prices fell for the fourth consecutive month in May, hitting their lowest point in nearly a year and a half as the global coronavirus outbreak continued to erode demand and slow supply chains, the United Nations Food and Agriculture Organization (FAO) reported Thursday.

The overall index dropped 1.9 percent in May compared to April, reaching its lowest point since December 2018.

Four out of five sub-indexes fell in May, with the index for grains and cereals -- the largest component in the index -- slipping by 1.0 percent. Prices for wheat and corn fell based on lower demand, but rice prices bucked the trend, rising slightly as demand for Japonica and Basmati rice saw demand rise compared to recent months.

Prices for vegetable oil slipped 2.8 percent to their lowest levels in ten months, pushed by lower palm oil prices.

Dairy prices were 7.3 percent lower based on lower demand for cheese and butter, though FAO said increased demand from China helped stabilize prices for powdered milk.

Meat prices saw a modest 0.8-percent decline, as rising supply was nearly offset by increased demand in Asian markets.

Only sugar prices rose in May, up 7.4 percent after falling 14.6 percent in April. FAO said up-and-down sugar prices were a reflection of unpredictable export levels from India and Thailand.

The monthly FAO Food Price Index is based on worldwide prices for 23 food commodity categories covering prices for 73 different products compared to a baseline year. The next index is scheduled for release on July 2, 2020.