Global food price index remains stable in March

•  Rising vegetable oil quotations offset lower prices for wheat, maize, rice and sugar, says FAO

The FAO Food Price Index, a benchmark of world food commodity price developments, remained largely unchanged in March from its revised February value, as declines in world cereal and sugar quotations offset a notable increase in vegetable oil prices, the Food and Agriculture Organisation of the United Nations (FAO) reported recently.

The index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 127.1 points in March, 6.9% higher than its corresponding level one year ago but remaining 20.7% below its March 2022 peak.

The FAO Cereal Price Index declined by 2.6% in March and was down 1.1% from March 2024. Global wheat prices dropped as concerns over crop conditions in some major Northern Hemisphere exporters eased, though currency movements tempered the decline. World maize prices also decreased from February, as did those for sorghum. The FAO All-Rice Price Index declined by 1.7% amid weak import demand and ample exportable supplies.

By contrast, the FAO Vegetable Oil Price Index increased by 3.7% from February to average 23.9% higher than its year-earlier level. Quotations for palm, soy, rapeseed, and sunflower oils all rose, driven by robust global import demand.

The FAO Meat Price Index also rose, increasing by 0.9% on the month and 2.7% on the year, primarily due to higher pig meat prices in Europe after Germany regained foot-and-mouth-disease-free status and 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 major producing countries.

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

The FAO Sugar Price Index dropped by 1.6% in March, mainly driven by signs of weaker global demand. Recent rainfall in key sugarcane growing areas of southern Brazil further contributed to the decline, while deteriorating production prospects in India and continuing concerns about the overall outlook for the crop in Brazil limited the price decline.

Updated forecasts for cereal supply and demand

The FAO also released a new Cereal Supply and Demand Brief on Friday, 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 2,849 million tons, representing a 0.3% year-on-year drop 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 tons, implying a 1.6% yearly increase due mostly to expanded plantings.

The FAO’s forecast for global wheat production in 2025 remains unchanged from last month at 795 million tons, on par with the revised estimate for 2024. 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 likely to decline in Australia, the US, and swathes of Near East Asia. Maize harvests in the Southern Hemisphere are set to vary, with increases expected in Brazil and South Africa but a decline in Argentina.

The new FAO forecast for world cereal utilisation in 2024/25 stands at 2,868 million tons, representing a 0.9% increase from the 2023/24 level, led primarily by a new record-high level of rice utilisation.

World cereal stocks are predicted to decline by 1.5% to 873.3 million tons by the close of seasons in 2025, driven mainly by an anticipated significant contraction in coarse grain stocks. By contrast, global wheat and rice inventories are expected to increase. The updated forecasts place the world cereal stocks-to-use ratio in 2024/25 at 30.1%, slightly down from the previous year but still indicating an overall comfortable level, the FAO said.

The FAO has further lowered its forecast for world cereal trade in 2024/25 by 5.3 million tons to 478.9 million tons, marking a 6.7% contraction from 2023/24 and the lowest level since 2019/20. Lower expected purchases by China are a primary driver of the lower trade forecasts for coarse grains and wheat. 

The Agricultural Market Information System (AMIS), hosted by the FAO, also released its monthly Market Monitor on Friday. In addition to the regular market analysis, the report’s feature article calls for dialogue on food commodity trade to safeguard global food security, noting that the average applied tariff on agricultural goods fell by more than half between 2005 and 2022.