Global food prices decline, meat edges upward

by Bryan Salvage
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ROME – The Food and Agriculture Organization of the United Nations announced its Food Price Index has decreased in March, following eight consecutive months of price spikes. Dropping the most were international prices of oils and sugar, followed by cereals. Dairy and meat prices were up, although only marginally in the case of meat. The FAO Meat Price Index averaged 169 points in March, little changed from February.

In March, the FAO Food Price Index averaged 230 points, down 2.9% from its peak in February – but it’s still 37% above March of 2010.

"The decrease in the overall index this month brings some welcome respite from the steady increases seen over the last eight months," said David Hallam, director of FAO's trade and market division. "But it would be premature to conclude that this is a reversal of the upward trend.”

"We need to see the information on new plantings over the next few weeks to get an idea of future production levels,” he added. “But low stock levels, the implications for oil prices of events in the Middle East and North Africa and the effects of the destruction in Japan all make for continuing uncertainty and price volatility over the coming months.”

In March, the Cereal Price Index averaged 252 points, down 2.6% from February, but still 60% higher than in March 2010. March was extremely volatile for grains, with international quotations first dropping sharply, driven largely by outside market developments, such as the increased economic uncertainties accompanying the turmoil in North Africa and parts of the Near East as well as the Japanese earthquake and tsunami, before regaining most of their losses. As a result of abundant supply in exporting countries and sluggish import demand, rice prices also fell.

The FAO Oils/Fats Price Index dropped 19 points, or 7%, in March, interrupting nine months of consecutive increases; the Sugar Price Index averaged 372 points in March, down as much as 10% from the highs of January and February; while the Dairy Price Index averaged 234 points in March, up 1.9% from February and 37% above its level in March 2010.
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