Weakening demand and falling oil prices due to the global pandemic drive down international prices for major food commodities
World food prices declined sharply in March, driven mostly by demand-side contractions linked to the effects of the COVID-19 pandemic and the drop in global oil prices due mostly to expectations of economic slowdown as governments roll out restrictions designed to respond to the health crisis.
The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 172.2 points during the month, down 4.3 percent from February.
The FAO Sugar Price Index posted the biggest drop, down 19.1 percent from the previous month. Causes include lower demand from out-of-home consumption linked to the confinement measures imposed by many countries, and lower demand from ethanol producers due to the steep fall in crude oil prices.
The FAO Vegetable Oil Price Index declined 12.0 percent in one month, mainly 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 percent, driven by declining quotations and global import demand for skim and whole milk powders, due largely 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 percent from February and stood at nearly its level of March 2019.
The FAO Meat Price Index fell by 0.6 percent, led by drops in international quotations for ovine and bovine meats, for which export availabilities are large and trade capacity dampened by logistic bottlenecks. But pig meat quotations rose amid surging global demand and as processing facilities were hampered by the restrictions on the movement of workers.