News: The FAO Food Price Index in March nearly unchanged from February

The FAO Food Price Index (FFPI) averaged 216 points in March 2012, virtually unchanged from 215 points in February. Among the various commodity groups, only oils prices showed strength, compensating for falling dairy quotations, while the indices of cereals, sugar and meat prices were largely unchanged from last month’s level.

The FAO Cereal Price Index averaged 227 points in March,  up 1 point from February. Maize prices registered some gain, supported by low inventories and a strong soybean market,  but wheat changed little as supplies remained ample. After several months of declines, prices of rice recovered somewhat in March, underpinned by large purchases by China and Nigeria.

The FAO Oils/Fats Price Index rose in March to 245 points, up 6 points (or 2.5 percent) from February, as markets reacted to the prospect of growing tightness in the 2011/12 supply and demand balance for oils. Weak growth in world palm oil production, limited global soy oil export availabilities and declining rapeseed production,  all contributed to the rise in oils prices.

The FAO Meat Price Index averaged 178 points in March, up marginally from  the previous month, sustained by a slight rise of bovine meat prices to what would be an all time high. Prices of pig meat and sheep meat changed little, while they weakened in the case of poultry amid slowing import demand and generally ample export availabilities. On average, meat prices in the first quarter, were 3.5 percent higher than last year.

The FAO Dairy Price Index averaged 197 points in March, down 5 points (2.5 percent)  from February and the lowest level since August 2010. All the dairy products manifested weakness last month, in particular butter, but also skim milk powder and casein. Since reaching record levels in March 2011, dairy prices have followed a downward trend, as supplies rose in Oceania, Europe and North America. As a result, prices in the first quarter were 12 percent lower in 2012 than last year.  

The FAO Sugar Price Index averaged 342 points in March, unchanged from February, but 30 points (8 percent) lower than in March 2011. Overall, sugar prices were volatile, as the market looked for direction ahead of the beginning of the new season in Brazil, the world’s largest sugar producer and exporter.

India, the EU and Thailand, have all reported increased output, which contributed to keeping prices below their high levels of last season. The announcement  by India to allow 1 million tonnes more exports also weighed on prices.