World food prices ‘decline sharply’ in March
World food prices took a hit last month (March 2020) according to the UN Food and Agriculture Organization (FAO).
The drop was largely driven by demand-side contradictions linked to the coronavirus, or COVID-19, pandemic. The drop in global oil prices, due mostly to expectations of economic slowdown, also played a role.
The findings come from the FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities. In March, such commodities averaged 172.2 points, demonstrating a 4.3% decline from February 2020.
“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.
Concerning individual commodity categories, the FAO Sugar Price Index saw the biggest drop, down 19.1% which can be associated, in part, with lower demand from out-of-home consumption in recent times.
The FAO Vegetable Oil Price Index declined 12% in one month, with the UN agency linked to falling palm oil priced. Soy and rapeseed oil prices also followed the trend. “Oil prices have fallen by more than half during the past month, which catalyses a large downward impact on biofuels, which are an important source of demand in the markets for sugar and vegetable oils,” said FAO analyst Peter Thoenes.
The FAO Dairy Price Index and Cereal Price Index also declined in March, down 3% and 1.9% respectively.
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