The United Nation’s Food and Agriculture Organization (FAO) Food Price Index continued to decline in March, dropping 1.5 percent to 173.8 points from February. Overall, the Food Index has been falling steadily since April 2014, on account of large global supplies for most commodities tracked by FAO.
A sharp fall in the price index for sugar, which reached its lowest level since February 2009, together with dipping prices for vegetable oils, cereals and meat, more than offset a rise in dairy prices and contributed to the lower index.
The Cereal Price Index averaged 169.8 points in March, down 1.1 percent from February and as much as 18.7 percent below its level a year earlier. The downward trend in 2015 has been mainly due to large export supplies and mounting inventories, in particular for wheat and maize.
The Vegetable Oil Index averaged 151.7 points in March, nearly 5 points below the February level and reaching the lowest value since September 2009. The slide was driven by palm and soy oils. While palm oil quotations eased further on continued weak global import demand, the drop in soy oil prices reflected good progress in South America’s bumper soybean harvest, combined with rising global inventories and expectations of record soybean plantings in the United States. Persistent weakness in crude oil prices also continued to weigh on the vegetable oil complex as a whole.
The Dairy Price Index rose in March for the second consecutive month to average 184.9 points, up 1.7 percent from February. The increases were pronounced for whole milk powder (up 10.7 percent), followed by skimmed milk powder (up 7.0 percent) and butter (up 2.1 percent). Cheese quotations declined by 3 percent. Limited export supplies in Oceania and Europe was the principal cause of the reversal of the falling world dairy price trend that prevailed between March 2014 and January 2015.
The Meat Price Index averaged 177 points in March, down 1.8 points from its revised February value. The reduction was caused by lower pig meat and poultry quotations, but prices for ovine meat also fell. Bovine meat quotations were largely unchanged. Since reaching an historic peak last July, the Index has fallen each month. Reduced import demand in Asia, where several countries recorded large production gains, and in the Russian Federation, which continues to impose restrictions on imports, have been important factors underlying the drop in prices.
The Sugar Price Index averaged 187.9 points in March, down 19.1 points (9.2 percent) from February—its lowest level since February 2009. The decline reflected improved crop prospects in major sugar producing countries, in particular Brazil, the world’s largest producer and exporter of sugar, but also the continued weakening of the Brazilian currency against the U.S. dollar that dropped by more than 10 percent over the month.