Weakening demand and falling oil prices due to the global pandemic drove down international prices for major food commodities last month, the Food and Agriculture Organization of the United Nations (FAO) said. The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 172.2 points in March, down by 4.3% from February. However, Abdolreza Abbassian, senior economist for FAO, explained that demand factors, not supply, mainly drove the price drops. These demand factors, in turn, were influenced by deteriorating economic prospects. The organisation said it would closely monitor prices and logistical issue for food commodities. That way it can alert countries of emerging problems that could exacerbate potential disruptions during the pandemic. QU Dongyu, FAO Director-General said agricultural trade continues to play an essential role in contributing to global food security. He also stressed the need to avoid policies that hinder trade flows that underpin food-supply systems.
How essential food commodity prices fared in March
The FAO Sugar Price Index posted the most significant drop, down 19.1% from the previous month. Causes include lower demand from out-of-home consumption linked to the confinement measures imposed by many countries and weaker demand from ethanol producers due to the steep fall in crude oil prices. The FAO Vegetable Oil Price Index declined 12.0% in one month, mainly due to stemming from falling palm oil prices linked to the plunge in crude mineral oil prices and rising uncertainties over the pandemic's impact on vegetable oil markets worldwide. Soy and rapeseed oil prices followed the trend. The FAO Dairy Price Index fell by 3.0%, driven by declining quotations and global import demand for skim and whole milk powders. Another factor is mainly due to disruptions in the dairy supply chains because of the containment measures aimed at controlling the spread of COVID-19. The FAO Cereal Price Index in March declined 1.9% from February and stood at nearly its level of March 2019. International wheat prices fell, because of the effects of abundant global supplies and broadly favourable crop prospects outweighed those of increased import demand from North Africa, and some small export limitations imposed by the Russian Federation. Maize prices also declined due to both ample supplies and much weaker demand from the biofuel sector. Meanwhile, international rice prices, by contrast, rose for the third consecutive month buoyed by stockpiling spurred by concerns over the pandemic. Prices also increased due to reports that Vietnam might introduce export bans - which its government has since downplayed, FAO said. (Image from Pixabay)
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