Global food prices drop 1.6% in April

Dairy sees biggest fall due to reduced purchases in Russia and China

Global food prices fell by 1.6 per cent in April this year as dairy, sugar and vegetable oil costs saw a decline over the previous month, as per the United Nations food agency FAO.

"Last month's decline was mostly caused by a sharp drop of dairy prices, although sugar and vegetable oil also fell. By contrast, cereals and meat prices firmed slightly," Food and Agriculture Organisation (FAO) said in its latest report.

The FAO's food index of 55 items averaged at 209.3 points in April this year, down by 1.6 per cent from March and 3.5 per cent below April 2013, it said.

According to the Rome-based agency, dairy prices fell by 6.9 per cent in April over the previous month as the market of all dairy products has been affected by reduced purchases by China and Russia.

China is the main importer of Whole Milk Powder and second largest importer of Skimmed Milk Powder, while Russia is the main importer of butter.

Additionally, the FAO said, an extended season in New Zealand and a good start to the dairy-year in the northern- hemisphere have meant that supplies for export have increased. Prices of all dairy commodities subsided, particularly butter and milk powder.

Similarly, global sugar prices dropped by 1.6 per cent in April over the previous month amid reports of large availabilities in the main producing regions, including Thailand, India and Australia.

Vegetable oil prices also declined by 2.8 per cent in the review period on decline in palm oil prices following reports of lower-than-anticipated import demand, most notably from the European Union.

Soybean oil prices, on the other hand, appreciated slightly as the market responded to the lingering tightness in global soybean supplies, FAO said.

However, cereal prices in April rose slightly by 0.5 per cent from March but was still 10.3 per cent below its value in April 2013.

"The monthly increase was less pronounced than those registered in February and March, as weather conditions improved in the US and tensions in Ukraine had little effect on the country's pace of grain shipments," FAO said.

Global meat prices also rose by 0.4 per cent in April as compared to the previous month due to stronger prices for pigmeat, in part on concerns over the effect of Porcine Epidemic Diarrhoea virus on export supplies in the US.