FAO March food price index down; near record high

FAO March food price index down; near record high

Milan: The FAO index of global food prices came off record highs in March after falls in grain, sugar and vegetable oils prices, UN Food and Agriculture Organisation said, warning it could be a pause before new rises.

The index, which measures monthly price changes for a food basket composed of cereals, oilseeds, dairy, meat and sugar, averaged 229.8 points in March, down from February’s record of 236.8 points - falling for the first time after eight months of rises.

“The decrease in the overall index this month brings some welcome respite from the steady increases seen over the last eight months," David Hallam, director of FAO’s Trade and Market Division, said in a statement.

“But it would be premature to conclude that this is a reversal of the upward trend," he said.

Rising food prices have climbed to the top of the international political agenda after contributing to protests that toppled the rulers of Tunisia and Egypt earlier this year, with unrest spreading to North Africa and the Middle East.

The Rome-based agency said prices could remain firm in the 2011/12 season because an expected increase in new cereal crops may not be enough to replenish falling stocks. And, as demand is expected to hit a record level in 2010/11.

The FAO’s Cereals Price Index, which includes prices of main food staples such as wheat, rice and corn, fell to an average of 251.9 points in March down 2.6% from February, but is still 60% higher than in March 2010.

March was extremely volatile for grains, with international prices first plunging, driven largely by outside market factors such as the increased economic uncertainty due to turmoil in North Africa and the Middle East and the natural disaster in Japan, before regaining most of their losses.

Rice prices also fell as a result of abundant supply in exporting countries and sluggish import demand, the FAO said.

The FAO Sugar Price Index averaged 372 points in March, down as much as 10% from the highs of January and February, it said.

The FAO Oils/Fats Price Index fell 7% in March interrupting nine months of consecutive increases, it said.