Global food prices monitored by the U.N. Food & Agriculture Organization (FAO) fell in March amid large available supplies and expectations of strong harvests.
The FAO Food Price Index averaged nearly 171 points in March, marking a 2.8% drop from the previous month while remaining 13.4% above the level a year earlier, according to the FAO news release.
FAO's Food Price Index is a trade-weighted index that tracks international market prices of five major food commodity groups.
Meat prices are the exception
The FAO Vegetable Oil Price Index was 6.2% lower for the month. Palm oil and soybean oil quotations both fell in March on the back of improving production forecasts, while those for rape and sunflower seed oils also declined due to higher-than-expected availabilities.
The FAO Sugar Price Index declined by 10.9% to its lowest level since May 2016 amid weak import demand and expectations for robust Brazilian supplies entering world markets as a result of strong harvests and slower domestic uptake for bio-ethanol production.
Buoyant milk supplies led to a 2.3% monthly decline in the FAO Dairy Price Index, which, nonetheless, remained well above its year-ago level.
The exception in the downward price trend was the FAO Meat Price Index, which rose 0.7% in March, led by firm import demand from Asia for bovine meat and pig meat.
Cereal market forecasts for 2017-18
FAO also released its first world cereal supply and demand outlook for the year ahead and expects it to be "another season of relative market tranquility," with grain inventories remaining at near-record levels.
Worldwide cereal production in 2017 is projected to be 2.597 billion metric tons, just 9 million mt short of the record set in 2016, according to FAO's latest "Cereal Supply & Demand" report.
FAO's first forecasts for the season hinge on climate conditions in the coming months and on farmers' price-sensitive decisions on which crops to plant.
The slight decline from 2016 is due to an anticipated reduction in global wheat production — which is now expected to fall 2.7% in 2017 to 740 mmt — mostly based on price-induced planting cuts in Australia, Canada and the U.S., FAO explained.
By contrast, total production of coarse grains in 2017 is provisionally expected to rise to a new record level of 1.353 billion mt, thanks substantially to a surge in production in Brazil and Argentina, along with a rebound in South Africa after last year's drought, according to FAO.
World rice production is expected to grow 1.0% to 504 mmt as more plantings in India and Indonesia and higher yields in Brazil and China should more than offset declines elsewhere, including in drought-stricken Sri Lanka.
Global cereal utilization is expected to grow by only 0.8% in 2017 to 2.597 billion mt. The deceleration from last year's pace of 2.2% reflects slower growth in the use of grains for animal feed as well as for biofuels such as ethanol, according to FAO.
Tallying both the output and consumption projections, FAO's first forecast for world cereal stocks at the close of 2017-18 stands at 680 mmt. That is down just 2 mmt from the previous season and leaves the global stock-to-utilization ratio at a comfortable 25.4% level.
Wheat stocks are expected to rise 2.5% to 246.6 mmt, while maize stocks will likely fall 4% to 207 mmt on the back of large drawdowns in China and the U.S. Global rice inventories are projected to remain broadly stable at 170 mmt, FAO reported.