The latest statement from the FAO Food Price Index, which measures the monthly change in international prices of food commodities, said that the dip was chiefly due to improved supplies, falling crude oil prices and a strong US dollar.
The overall food price index averaged 179.4 points in February 2015, down 1.8 points (1%) from its January 2015 value and 29 points (14%) below its level in February 2014.
“The first thing to flag is the favourable outlook for production of a number of crops in 2015,” said Michael Griffin, FAO's dairy and livestock market expert. “Stocks are also very strong” for most cereals, he added.
“The decline was most pronounced for wheat, reflecting continued improvement in the 2015 wheat production prospects, amid already large world inventories,” FAO said in the statement.
Forecast for 2015
The index reported more optimistic expectations about 2014 cereal production and 2015 carryover stocks, although the wheat output in 2015 forecast is slightly below the record of 2014, said FAO.
Early prospects for cereal supplies in 2015/16 are “mostly favourable”, partly sustained by large stocks accumulated over the previous two seasons, it said. While the global wheat production forecast in 2015 indicated a small contraction, “mostly reflecting an expected decline in Europe from last year’s record output”, it said.
Vegetables and dairy are the only two commodity groups that have seen an increase in prices on January 2015. The rest of the groups, cereals, meat and sugar have all seen a decline, said the food price index.
Cereals were down 3.2% from January, meat was down 1.4% from its revised January value, and sugar was down 4.9%, it said.
It added that the dairy prices had risen for the first time in a year because of a drought in New Zealand and limited export supplies from Australia. It was up 4.6% from its January value, while vegetables saw a slight increase of 0.4%, it said.