International food prices are likely to stay under downward pressure due to large supplies, low freight rates and a strong US dollar
The United Nations (UN) has released a report on agricultural commodity prices where the international agency says that hefty supply levels will mean reduced rates, despite a slight fall in harvests worldwide. The reduction in import bills is likely to benefit low-income countries.
“The world food import bill is forecast to reach a five-year low in 2015,” says Food Outlook, a biannual publication by the UN’s Food and Agriculture Organization (FAO).
“Currency movements and macroeconomic developments may have important implications for markets again in 2015-16,” the report adds.
The Food Price Index, a database that tracks and aggregates on a monthly basis the prices of cereals, meat, dairy products, vegetable oils and sugar in international markets, reflected the decline. There has been a 1.2 per cent overall drop in April from March.
The index reached 171 points, its lowest level since June 2010, and 19.2 per cent less than a year ago.
Prices to remain low
According to Food Outlook, international food prices are likely to stay under downward pressure due to large supplies, low freight rates and a strong US dollar.
Despite a reduction in harvests expected this year, exceptionally high levels of existing stocks will offset the pressure, according to the report.
Dairy prices reduced the most, buoying imports in Africa, while the abolition of the European Union’s (EU) milk quota system was also one of the main drivers of the 6.7 per cent monthly drop.
Prices of sugar, cereals and vegetable oils also declined. By contrast, meat values rose in April, which was the first increase since August 2014.