According to sources 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 per cent on February.
FAO Senior Economist Abdolreza Abbassian said "The price drops are largely driven by demand factors, not supply, and the demand factors are influenced by ever-more deteriorating economic prospects". 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 vegetable oil price index slumped 12 per cent, pushed down by sliding palm oil prices which were linked to a plunge in crude mineral oil prices and growing uncertainty over the impact of coronavirus on the market. oil prices have fallen by more than half during the past month, which catalyzes 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.
