According to the latest UN Food and Agriculture Organization (FAO) Food Price Index (FPI), world food prices in March remained virtually unchanged from their February levels. The Index averaged 216 points in March, compared to 215 in February.
Following are highlights:
- The FAO Cereal Price Index averaged 227 points in March, up 1 point from February. Corn 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% from February, as markets reacted to the prospect of growing tightness in the 2011-12. Weak growth in world palm oil production and limited global soy oil export availabilities combined with declining rapeseed production 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 price but still reaching 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% higher than last year.
- The FAO Dairy Price Index averaged 197 points in March, down 5 points or 2.5% from February and registered the lowest level since August 2010. All the dairy products showed weakness last month, in particular butter, as well as 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% lower in 2012 than last year.
- The FAO Sugar Price Index averaged 342 points in March, and remained unchanged from February but was 30 points or 8% 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.
FAO says based on expectations for world cereal carryover stocks in 2012 to rise by around 1 million metric tons (MMT) to 519 MMT, due to of higher rice inventories. "At the current forecast level, the world cereal stocks-to-use ratio in 2011-12 reaches 22.1%, up slightly from 21.7% in 2010-11," it says. "Among the major cereals, rice inventories are forecast to increase the most - by 11 MMT s to 152 MMT, the highest level since 2000. Wheat stocks are also expected to rise sharply by 7 MMT to 196 MMT, the second highest level since 2003; however, coarse grains stocks could decline by nearly 3 MMT to 171 MMT, the lowest level since 2008."
FAO left its global 2012-13 wheat production forecast unchanged at 590 MMT, 1.4% below the 2011 record. "In spite of this decline, world wheat supplies in 2012-13 would still exceed projected need because of large inventories, according to this month's report. Rice markets also appear to be well supplied in 2012-13 given consecutive years of record production which have helped boost inventories," it states. "However, coarse grain supplies will be particularly tight in the coming months, especially for maize in the United States, the world's largest producer and exporter."