World food prices at 5-yr low, unlikely to rise – UN

Reuters/Heino Kalis
Global food prices continued to decline and fell to their lowest since 2010 on lower agricultural commodities prices the UN Food and Agriculture Organization (FAO) said. More supplies and a strong US dollar have kept prices under downward pressure.

Food prices averaged 171 points in April, down 1.2 percent from March and 19.2 percent below their level in April 2014, according to the FAO price index in the biannual Food Outlook issued on Thursday.

Dairy prices fell the most, charting a 6.7 percent drop from March, sugar, cereals and vegetable oil prices also declined. Meat price was the only gainer in April, rising 1.7 percent from its revised March value. Higher import demand in China, Japan, the United States and Vietnam was the main factor underpinning the overall meat market.

The FAO predicts global cereal production will reach 2,509 billion tons for 2015, 1.5 percent down from last year's record but nearly 5 percent above the average of the past five years. Overabundance of wheat is likely to continue into the 2015-2016 season in spite of the forecast decline in 2015 production. World wheat inventories are at sufficiently large levels, following two consecutive years of record crop.

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World sugar production is estimated to reach 181 million tons in the 2014-2015 season, with a modest 0.2 percent increase over the previous year. Favorable weather conditions and expanding planted areas will lead to higher output in most countries, with the exception of Brazil, China and Thailand, the report says.

Global food prices are likely to stay under pressure due to large supplies and a strong US dollar, according to the Food Outlook, which noted that "currency movements and macroeconomic developments may have important implications for markets again in 2015-2016.” A strong dollar tends to lower international demand and with it commodity prices as most of them are US dollar-denominated.

The FAO Food Price Index measures monthly changes in international prices of a basket of food commodities. It consists of the average of five commodity group price indices: cereals, oilseeds, dairy products, meat and sugar.