World food prices edged up in March, as sharp rises in sugar and vegetable oil more than offset a plunge in dairy prices, the United Nations’ food agency said on Thursday.
Food prices are near a seven-year low after four consecutive annual declines, and are expected to be dragged even lower this year by slowing growth in the global economy.
The Food and Agriculture Organization’s (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 151.0 points in March against a downwardly revised 149.5 points in February.
March’s reading is the highest so far this year, but food prices on international markets were still almost 12 percent lower than a year earlier, FAO said.
Expectations of a larger sugar production deficit and reports of more raw sugar being used to make ethanol in Brazil drove sugar prices up 17.1 percent to their highest since November 2014.
Vegetable oil prices jumped 6.3 percent, propelled by surging palm oil prices on prolonged dry weather in Malaysia and Indonesia, the world’s main producers.
The dairy price index fell to its lowest level since June 2009, led by plummeting butter and cheese prices.
FAO gave its first forecast for world cereals output in 2016-17 at 2.521 billion tonnes, which would be 4 million tonnes lower than last year but still the third-highest on record.
Large inventory levels and relatively sluggish global demand are likely to keep market conditions for staple food grains stable for at least another season, FAO said.
The slight forecast decline in world cereals production is largely due to expectations that wheat output will be some 20 million tonnes lower than last year, at 712.7 million tonnes.
The decline is mostly due to smaller plantings in Russia and Ukraine, which have both been hit by dry weather.
Global cereal utilization is expected to rise only modestly but still exceed production, leaving world stocks 3.9 percent lower annually at 611 million tonnes.
