The United Nations has reported that global food prices have fallen in March.
The biggest slide comes from the sugar and oil sectors.
Food prices drop
The United Nations Food and Agriculture Organisation, or FAO, has reported that global food prices dropped during the month of March. This was due to a combination of factors, such as large available stocks, predictions of strong harvests to come, and also good cereal harvests expected later in the year.
The food price index set up by the FAO measures the monthly international prices as they change around the world. It covers foods such as cereals, vegetable oils, sugar, meat, and dairy products. It averaged 171 points in March, which is a 2.8% drop from the figure for February. On the other hand, it does still remain at 13.4% above March of 2016.
Cereal prices dropped 1.8% to contribute to some of the overall gap, with wheat and maize making the biggest impact. This sector is actually now on par with the March 2016 figure.
Those who work in supply chain jobs may have noticed a huge reduction for vegetable oil prices, with a drop of 6.2%. Palm and soy oil are both facing improving production forecast, which has driven a lower price. For rapeseed and sunflower seed oils, there are higher quantities available than predicted, which has also forced the price down.
Sugar took a drop of 10.9%, bringing it to its lowest level in this 12-month period. Weak import demand combined with strong supplies expected from Brazil mean that the prices are likely to continue dropping. Brazil has seen good harvests as well as less domestic demand for the production of bio-ethanol, so supplies are likely to be extensive.
Dairy prices are well above their position from a year ago, but did still manage to drop by 2.3%. Milk supplies are on the rise, which is the main reason for the overall drop.
Meat prices, however, are going up in price by 0.7%. Asian markets are looking to import bovine and pig meat in larger numbers, and this strong demand has encourage cost increases.
New 2017/18 prediction figures
The FAO has also released their predictions for the world cereal supply over the year, for the first time. Their statement calls it “another season of relative market tranquility”, as grain inventories are likely to stay at what are near-record levels.
The record for the most production in a year was set in 2016, and this year’s forecast looks to be just 9 million tonnes shy at 2,597 million tonnes. This is according to the Cereal Supply and Demand report, which looks at current production levels as well as how much is likely to be needed as we go forwards.
Thanks to the large stores, the price has fallen, and so planting cuts are expected in Australia, Canada, and the US. These fresh produce changes will mean fewer jobs in those regions, as well as a reduction of 2.7% in the global wheat production figures. 2017 is expected to see 740 million tonnes produced.
However, the total production of grains is expected to rise to a new record level of 1,353 million tonnes. After drought in South Africa last year, the crops are expected to recover, and there is also a rise in production in Argentina and Brazil to account for the change.
Overall this means stocks of cereal may continue to rise, potentially taking us past record figures and causing the price to drop even further throughout the 2017 and 2018 seasons if things remain as they stand.