The United Nation’s Food and Agriculture Organization (FAO) Food Price Index continued to decline in April, dropping 1.2 percent to 171 points from March, and 19.2 percent below its level in April 2014. Dairy, sugar, cereals and vegetable oils prices declined while meat values rose in April, their first increase since August 2014. The April average puts the Food Price Index at its lowest level since June 2010.
The Cereal Price Index averaged 167.6 points in April, down 2.2 points (1.3 percent) from March and nearly 42 points (20 percent) below March 2014. Wheat prices continued their decline in April, influenced by large supplies and slow trade activity, as many buyers await in expectation of even lower prices in the coming months. Maize quotations changed little compared to March, with stronger import demand being offset by prospects for more than ample supplies. Rice prices moved marginally lower, on subdued demand.
The Vegetable Oil Price Index averaged 150.2 points in April, down 1.5 points (or 1 percent) from March. The slide was driven by palm oil, the key commodity in the index. International palm oil quotations continued to ease as higher than expected output in Indonesia and Malaysia coincided with weak global import demand. Global soy oil prices increased slightly, reflecting concerns about slower than usual farmer selling and renewed strikes in South America. Prices for sunflower seed oil strengthened amid falling world production and export supplies.
The Dairy Price Index averaged 172.4 points in April, down 12.5 points (6.7 percent) from March. Milk powders and butter were the main commodities affected. The price weakness affecting the sector reflects a favorable opening to the April-March dairy year in the European Union, combined with the abolition of the milk quota system, which raised expectations of abundant export supplies. Dairy prices also were influenced by uncertainty over the level of China's purchases during 2015 and continued import prohibitions imposed by the Russian Federation.
The Meat Price Index averaged 178 points in April, up 3 points (1.7 percent) from its revised March value. Factors contributing to the rise included higher prices for bovine and ovine meat from Oceania, where herd rebuilding restricted exports. Pig meat prices also showed some upward movement, while those of poultry were lower. For meat overall, moderately higher import demand in China, Japan, the United States and Vietnam is the main factor underpinning the market.
The Sugar Price Index averaged 185.5 points in April, down 2.4 points (1.3 percent) from March and reaching its lowest level since February 2009. The decrease was mainly fueled by reports of higher than expected sugarcane harvesting in Brazil, the world’s largest producer and exporter of sugar. India’s recent announcement it would raise sugar import tariffs from 25 percent to 40 percent, in a bid to support falling domestic prices also weighed on international sugar quotations. Persistent weakness in the Brazilian currency against the U.S. dollar also kept the Sugar Price Index under pressure.
