World food prices fall sharply in March because of coronavirus
6561 Min Read
World food prices fell sharply in March, hit by a drop in demand tied to the coronavirus pandemic and a plunge in global oil prices, the United Nations food agency said on Thursday.
The Food and Agriculture Organization (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 172.2 points last month, down 4.3% on February.
“The price drops are largely driven by demand factors, not supply, and the demand factors are influenced by ever-more deteriorating economic prospects,” said FAO Senior Economist Abdolreza Abbassian. FAO also slightly increased its forecast for cereal production, predicting a crop totalling some 2.721 billion tonnes in 2019, up from a previous forecast of 2.719 billion and some 2.4% higher than the 2018 crop.
FAO’s sugar price index posted the biggest fall, down 19.1% from the previous month. The drop was triggered by a reduction in consumption linked to the virus lockdowns seen in many countries, and lower demand from ethanol producers due to the recent dive in crude oil prices, the Rome-based agency said.
The vegetable oil price index slumped 12%, pushed down by sliding palm oil prices which was linked to a plunge in crude mineral oil prices and growing uncertainty over the impact of coronavirus on the market.
The dairy price index dropped 3%, driven by declining quotations and slowing global import demand for skim and whole milk powders, while the meat index fell by 0.6%.
