Global food prices extended a slide to a five-year low last month as dairy prices tumbled, the UN’s Food & Agriculture Organization reported.
An index of 73 food prices from around the world dropped 0.9 percent last month to 165.1 points, the lowest since September 2009, according to a report released Thursday from the United Nations agency in Rome.
Sliding dairy and sugar prices more than made up for rising grain costs last month. The end of the European Union’s milk quota system and large unsold dairy stocks in New Zealand weighed on quotations for milk powder, butter and cheese, according to the FAO. The EU ended milk production limits on April 1, leaving farmers free to boost output.
“In the case of dairy, it’s very clear that the policy change in the EU has made a big difference,” said Concepcion Calpe, a senior economist at the FAO in Rome. “Now that the quota is abolished we expect a big surplus, adding to the situation in New Zealand.”
The gauge, which includes prices for grain, meat, dairy, edible oils and sugar, fell for an eighth straight month, the longest slide since February 2009.
Global dairy prices fell last month to the lowest level since September 2009, with uncertainty about Chinese demand and an import ban by Russia adding to downward pressure, the FAO said. The gauge for sugar slid to the lowest level since December 2008 on better-than-expected production in India and Thailand, according to the report.
Global grain production will be 2.53 billion metric tons, 2.2 million tons more than expected last month and 1.1 percent smaller than last year’s record, the FAO said.
An index of grain prices rose 1.5 percent last month, the first gain in six months and rebounding from the lowest since July 2010, the FAO said.
Rudy Ruitenberg, Bloomberg Business