Food price index lowers as cereal, vegetable, oil, sugar price dropped in March: UN

World food prices were broadly steady in March, with a jump in dairy prices offset by drops in cereal, vegetable oil and sugar price quotations, the United Nations food agency said on Thursday. The Food and Agriculture Organization's (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 167.0 points last month, down from 166.8 in February.

The index was 3.6 per cent below its level of one year ago. The FAO dairy price index jumped 6.2 per cent from February's value, driven by strong import demand for butter, whole milk powder and cheese. The meat price index rose 0.4 per cent month-on-month.

By contrast, FAO's vegetable oil price index fell 4.4 per cent from the previous month, due partly to limited demand for palm oil, while its sugar index dropped 2.1 per cent and its cereal index fell 2.2 per cent in February. FAO raised its latest world cereal production forecast for 2018 to 2.655 billion tonnes, against the 2.609 billion it forecast a month ago. The figure was still 1.8 per cent down on a year-on-year basis.

The U.N. agency said the latest forecast contained sharply raised estimates for global cereal production, utilisation and stocks following the release of new data from China for the period 2007-2017. "FAO's new estimate for global cereal stocks for crop years ending in 2019 has been scaled up by almost 11 per cent to 849 million tonnes, mostly reflecting larger holdings in China," the agency said in a statement.

The U.N. agency forecast for world wheat production in 2019 remained steady at 757 million tonnes, four per cent above the 2018 level but short of the record high registered in 2017.