The FAO Food Price Index averaged 215.5 points in April 2013, up two points (1.0 per cent) from its revised March value of 213.2 points and from April last year. At that level, the index is only nine per cent below the peak reached in February 2011. Similar to the price development in March, the April increase was driven almost exclusively by a sharp rise in dairy quotations, as meat prices rose marginally while those of the other food commodities fell.
The FAO Cereal Price Index averaged 234.6 points in April, down 10 points (4.1 per cent) from March but nearly 11 points (4.9 per cent) above the corresponding period last year. Most of the decline in April was triggered by weaker maize prices on expectation of higher closing stocks and favourable 2013 crop prospects. Wheat prices changed little, as the downward pressure stemming from expectation of larger inventories was offset by the upward pressure resulting from concern over the poor growing conditions and spring crop planting delays in the United States. Rice prices were marginally down, depressed by falling Indica rice quotations, while Japonica and, especially, fragrant rice prices moved upwards.
The FAO Oils/Fats Price Index averaged 199.0 points in April, down two points (1.5 per cent) from March. The decline was mainly led by palm and soy oil. Palm oil prices eased further reflecting abundant stocks held both by exporting and importing countries, and an expected acceleration in production. The decrease in soy oil prices reflects good progress in South America’s record soybean harvest, larger than anticipated inventory levels in the United States and initial forecasts of a record US soybean crop later this year. Furthermore, weakening energy prices and persistent global macroeconomic concerns continued to weigh on the vegetable oil complex as a whole.
The FAO Dairy Price Index averaged 258.8 points in April, a sharp rise of nearly 34 points (14.9 per cent) from March. The main cause of the price surge seen in recent months is a steep decline in New Zealand’s milk production, following an abnormally prolonged dry period at the start of the year leading to farmers drying off or culling milk cows early, which in turn caused a reduction in the processing of dairy products. The leap in prices is partly a reflection of the absence of commercial stocks to cater for such an unexpected reduction in availability, rather than a more profound shortage of supplies, as New Zealand’s overall output for the 2012/2013 (June-May) production year is projected to finish at record levels. In Europe, warmer weather during April has allowed cumulative milk production to return to the seasonal average in some countries.
The FAO Meat Price Index averaged 178.7 points in April, a level which it has maintained since the latter part of 2012, moving within the narrow band of 177 to 179. Nevertheless, meat prices overall remain high by historical standards: from the early part of 2011, the index has stayed above its previous peak of 170 reached in mid-2008. Quotations for the different types of meat showed some variation in April, with poultry and pork rising by one per cent and three per cent, respectively, despite a limited reduction in feed prices, and those of sheep meat and beef falling slightly.
The FAO Sugar Price Index averaged 252.6 points in April, down over nine points (3.6 per cent) from March. After rebounding in March, prices fell sharply in April mostly on expectation of a significant recovery in cane crop for the new crushing season in Brazil, the world’s largest exporter. With larger production of sugar expected to enter the world market and weaker import demand, sugar export prices were put under downward pressure.
