The FAO Food Price Index drops further in March

The FAO Food Price Index averaged 173.8 points in March 2015, down 2.6 points (1.5 percent) from its revised February value and nearly 40 points (18.7 percent) below its level in March 2014. Sugar prices dipped particularly strongly in March, with more modest declines recorded by vegetable oils, cereals and meat. By contrast, dairy values rose for the second consecutive month, departing from the general negative trend that dominated the other commodity markets. Overall, except for a pause in October 2014, the Index has been falling steadily since April 2014, on account of large global supplies for most commodities included in the Index.

The FAO Cereal Price Index averaged 169.8 points in March, down another 1.9 points (1.1 percent) from February and as much as 39 points (18.7 percent) below the corresponding month last year. After a short-lived increase towards the end of 2014, the Index has been falling since the start of 2015, as large export supplies weighed on international prices. In March, wheat and maize prices were down by nearly 2 percent from February, pressured by strong export competition and a generally favourable outlook for 2015 production.

The FAO Vegetable Oil Price Index averaged 151.7 points in March, nearly 5 points (or 3.1 percent) 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 FAO Dairy Price Index averaged 184.9 points in March, up 3.0 points (1.7 percent) from its February value and the second consecutive monthly rise. The increases were particularly 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, however, 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 FAO Meat Price Index averaged 177.0 points in March, down 1.8 points (1.0 percent) from its revised February value. The reduction was caused principally by lower pigmeat 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 FAO 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 (Real) against the US dollar which dropped by more than 10 percent over the month.