Declines in world cereal and sugar quotations offset a notable increase in vegetable oil prices, the Food and Agriculture Organization of the United Nations (FAO) reports.

The FAO Food Price Index remained largely unchanged in March from its revised February value. The Index, a benchmark of world food commodity price developments, averaged 127.1 points in March, 6.9% higher than its corresponding level one year ago. However, this is 20.7% below its March 2022 peak.

Commodity declines

Cereal prices dipped by 2.6% in March, a 1.1% decline from March 2024, while global wheat prices dropped as concerns over crop conditions in some major Northern Hemisphere exporters eased. However, currency movements tempered the decline, according to the FAO.

Sugar dropped by 1.6% in March because of weaker global demand. Rainfall in key sugarcane-growing areas of southern Brazil also contributed to the decline. Deteriorating production prospects in India and continuing concerns about the overall outlook for the crop in Brazil limited the price decline.

Maize, sorghum, and barley prices also dropped from February, while the FAO All-Rice Price Index declined by 1.7% amid weak import demand and ample exportable supplies.

Vegetable oil and meat price increases

The FAO Vegetable Oil Price Index increased by 3.7% from February to average 23.9% higher than the previous year. Quotations for palm, soy, rapeseed, and sunflower oils increased, driven by robust global import demand.

The FAO Meat Price Index also rose by 0.9% in the month and 2.7% in the year. This was partly driven by higher European pig meat prices after Germany regained foot-and-mouth-disease-free status. Another factor was the strengthening of the euro against the US dollar. 

World poultry meat prices remained largely stable in March despite the continued challenges posed by widespread avian influenza outbreaks in some key producing countries.

The FAO Dairy Price Index was also unchanged, with lower international cheese prices offset by higher quotations for butter and milk powders.

Forecasts for cereal supply and demand

The FAO has also released a new Cereal Supply and Demand Brief, with revised estimates for 2024 and fresh insights on cropping and crop prospects in 2025.

The estimate for global cereal production in 2024 stood at 2849 million tons, representing a 0.3% year-on-year dro but higher than previous estimates due to  larger-than-previously-anticipated wheat outturns in Australia and Kazakhstan.

The FAO’s world rice production forecast for 2024/25 is little changed at 543.3 million metric tons, implying a 1.6% yearly increase due mostly to expanded plantings. 

The forecast for global wheat production in 2025 remains unchanged from last month at 895 million metric tons. Wheat output in the EU is expected to expand by 12%, following weather-induced declines in 2024, and is also likely to increase in Argentina, Egypt and India, while declining in Australia, the US and swathes of Near East Asia.