A measure of global food prices retracted during March. The United Nation’s Food and Agriculture Organization’s Food Price Index averaged nearly 171 points in March 2017, down almost five points from February, but still 13 percent above its level a year earlier. The Index consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004.
With the exception of meat, the indices of all other commodities used in the calculation of the index dropped in March, especially those of sugar and vegetable oils. The FAO Cereal Price Index averaged 147.8 points in March, down 1.8 percent, and the Vegetable Oil Price Index averaged 167.6 points in March, down for the second consecutive month, dropping 6.2 percent from February. The dairy index averaged 189.8, down 2.3 percent, and the meat index average 163.2, up 0.7 percent. Finally, global sugar prices were down ten percent.
From the National Association of Farm Broadcasting news service.
The FAO Food Price Index fell in March
» The FAO Food Price Index* (FFPI) averaged nearly 171 points in March 2017, down almost 5 points (2.8 percent) from February, but still 20 points (13.4 percent) above its level a year earlier. With the exception of meat, the indices of all other commodities used in the calculation of the FFPI dropped in March, especially those of sugar and vegetable oils.
» The FAO Cereal Price Index averaged 147.8 points in March, down 2.7 points (1.8 percent) from the previous month and essentially at a par with its value in March 2016. Ample available supplies, combined with good production prospects in the new season, weighed on export quotations. International rice prices were little varied, while wheat quotations were generally weaker, following improved weather conditions in major producing regions. Maize values also fell, mostly on large supplies from recently harvested crops in South America, which intensified export competition in March with ample export supplies and no major upturn in import demand.
» The FAO Vegetable Oil Price Index averaged 167.6 points in March, down for the second consecutive month. While the index dropped by 11 points (or 6.2 percent) month-on-month, it continued to fare above its corresponding level in the last two years. The slide in the index primarily reflects developments in the palm and soy oil sector. Palm oil values dropped by 5.6 percent (reaching 5-month lows) as prospective production increases in Southeast Asia, Indonesia in particular, coincided with weak global import demand. Meanwhile, soyoil quotations fell by 3.5 percent (falling to 8-month lows), fuelled by much improved harvest forecasts in South America and prospects of higher 2017/18 plantings in the US. Higher than expected availabilities of rape- and sunflower-seed oils also weighed on the index.
» The FAO Dairy Price Index averaged 189.8 in March, down 4.4 points (2.3 percent) from the previous month, but still 60 points (46 percent) higher year-on-year. The decrease from February marked the first decline since April 2016, reflecting ample milk supplies in the northern hemisphere and prospects for higher-than-earlier anticipated milk production in Oceania. Combined, these factors fuelled expectations of increased supplies of milk powders and cheese. Conversely, butter prices rose, amid reduced export availability stemming from continued firm domestic demand in Europe and North America.
» The Meat Price Index averaged 163.2 points in March, up 1.2 points (0.7 percent) from February and 17 points (12 percent) higher than in March 2016. Quotations for the individual categories of meat were little changed. Slight increases for bovine meat and pigmeat were, respectively, influenced by continued constrained availability in Oceania and firm import demand from Asia, particularly China. Poultry and ovine meat markets remained well-balanced.
» The FAO Sugar Price Index averaged 256.6 points in March, down as much as 31.3 points (10.9 percent) from February and reaching its lowest level since May 2016. The decline reflected generally weak import demand combined with expectation of higher Brazilian supplies entering world markets as a result of a strong output increase and slower domestic intake for bio-ethanol production.
* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.