Drought in Russia: Grain region particularly affected
In Russia, the main region for grain cultivation has been experiencing dry conditions for weeks. This is likely to result in lower yields and poorer quality than previously expected.
The FAO Dairy Price Index continued its upward trend in May 2025, primarily driven by increased prices of fatty products such as butter, cheese, and whole milk powder. The FAO Milk Price Index averaged 153.5 points in May 2025, representing a 1.3 point or 0.8% increase from the previous month. Compared to May 2024, it has risen by 27.2 points or 21.5%. The FAO attributes the further price increase to high demand for dairy products, particularly from Asia, coupled with limited supply, especially in Europe. International butter prices remained at historically high levels in May, supported by strong demand from Asia and the Middle East while milk production in Australia decreased. EU-27 butter, due to its relatively higher price level, saw limited demand, preventing further price hikes according to the FAO. Cheese prices increased for the second consecutive month, driven by continued high demand from the foodservice sector, particularly in East and Southeast Asia, and limited availability in the European Union due to unfavorable weather conditions and disease outbreaks earlier in the year. Whole milk powder prices rose by an additional 4% compared to April, attributed by the FAO to increased imports from China alongside constrained supply growth. Conversely, skimmed milk powder prices slightly decreased by 0.2% in May. The FAO notes that the ample supply of skimmed milk powder, as an indirect byproduct of increased butter production, was nearly offset by rising demand from the Middle East and North Africa.