Prices hit near three-year peak
World cereal prices climbed to a 19-month high in May as fuel and fertiliser costs spiked on the back of a shipping blockade in the Middle East. The Food and Agriculture Organization of the United Nations (FAO) reported that the cereals index averaged 114.3 last month, matching levels not seen since October 2024. Within that measure, wheat prices rose 3.4% month-on-month and were up 7.8% year-on-year, while maize prices climbed 1.9% and 3.9% respectively.
Hormuz bottleneck threatens global fertiliser supply
The Strait of Hormuz blockade, which began in late February as part of the US-Israel conflict with Iran, is choking off global fertiliser supplies. About 40% of the world's fertiliser supply comes from the Middle East, meaning the shipping disruption has direct consequences for crop inputs and food production worldwide.
The FAO warned that continued uncertainty affecting key trade routes "could reduce fertiliser use and place additional pressure on food prices, highlighting the need for coordinated international action." Boubaker Ben-Belhassen, director of the FAO's Markets and Trade division, said that "rising cereal prices underscore vulnerability to weather-related risks and disruptions in energy and input markets."
Broader food basket climbs but volatility persists
The overall FAO food index, which tracks cereals, meat, dairy, oils and sugar, dipped 0.2% in May from April but was 2.9% higher than in May 2025. At 130.8, it reached its highest level since January 2023. Within that composite, the meat index edged to 130.5, its highest reading in the FAO's records going back to 1990. Meat prices rose on strong import demand from China and the United States, though pig meat prices fell in the European Union due to abundant supplies.
Sugar prices surged 7.5% month-on-month on concerns that El Niño conditions could hurt production in India and Thailand. Vegetable oils were the only major component to decline in May, dropping 4.6% as palm oil prices fell on weaker import demand. Rice prices climbed 2.7% from April as weather concerns and higher crude oil prices supported quotations in Asia.