Global food price index drops again in March

Global food prices index again declined in March, dropping 1.5 percent from February, and 18.7 percent (40 points) below its level a year earlier, Food and Agriculture Organisation (FAO) disclosed in its latest Food Price Index.

The report, which explained that the continued drops were driven by sugar’s sharp slide, informed that the index had been on a downward path since April 2014. It, however, added that the global cereal supplies for 2014/15 forecast was expected to rise further.

“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, which in March averaged 173.8 points,” it said.

The FAO Food Price Index is a trade-weighted index that tracks prices of five major food commodity groups on international markets. It aggregates price sub-indices of cereals, meat, dairy products, vegetable oils and sugar.

The Sugar Price Index averaged 187.9 points in March, down a sharp 9.2 percent from February, explaining that this was mainly due to improved crop prospects but also the continued weakening of the Brazilian currency against the US dollar, which is supportive to exports.

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 report further said the downward trend in 2015 had been mainly due to large export supplies and mounting inventories, in particular for wheat and maize.

Also, the FAO Vegetable Oil Price Index averaged 151.7 points in March, nearly 3.1 percent below the February level and reaching its lowest value since September 2009.

The FAO Meat Price Index averaged 177 points in March, down 1 percent from its revised February value, while that of dairy rose in March for the second consecutive month to average 184.9 points, up 1.7 percent from February.

Meanwhile, the cereal output estimate for 2014 was raised to 2 544 million tonnes mainly due to a larger than anticipated maize harvest in the European Union, according to FAO’s latest Cereal Supply and Demand Brief.

According to the report, if confirmed, global cereal output in 2014 would outstrip the 2013 record by 1 percent.

Looking ahead to the 2015 season, it said the global wheat production was expected to reach 722 million tons in 2015, around 1 percent below the current estimate for 2014, mainly due to reduced plantings in the EU.

It said China, India and Pakistan were all expected to harvest close to 2014’s record levels, while production was predicted to decline in the Russian Federation and Ukraine.

As for coarse grains, plantings are only about to start in the northern hemisphere. However, early indications in the southern hemisphere, where crops are more advanced, point to a decline in 2015 production from last year’s high levels.

In particular, South Africa’s maize production is expected to decline sharply, by 33 percent, following severe precipitation shortfalls earlier this year.

Rice production prospects for 2015 are generally positive in the Southern hemisphere countries, with sizeable increases forecast in Indonesia and Sri Lanka in Asia and Colombia and Paraguay in South America.

Harrison Edeh with agency report