UN: Sharp Decline in the World Food Prices because of the Coronavirus

World food prices declined in April for the third month in a row, affected by the economic and logistical negative impact of the coronavirus pandemic, the UN Food Agency reported on Thursday, BNR reported, citing Reuters.

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 172.2 points during the month, down 4.3 percent from February.

"The price drops are largely driven by demand factors, not supply, and the demand factors are influenced by ever-more deteriorating economic prospects," said FAO Senior Economist Abdolreza Abbassian, the UN said in a press release.

The FAO Sugar Price Index posted the biggest drop, down 19.1 percent from the previous month. Causes include lower demand from out-of-home consumption linked to the confinement measures imposed by many countries, and lower demand from ethanol producers due to the steep fall in crude oil prices.

The FAO Vegetable Oil Price Index declined 12.0 percent in one month, mainly stemming from falling palm oil prices linked to the plunge in crude mineral oil prices and rising uncertainties over the pandemic's impact on vegetable oil markets worldwide. Soy and rapeseed oil prices followed the trend.

"Oil prices have fallen by more than half during the past month, which catalyzes a large downward impact on biofuels, which are an important source of demand in the markets for sugar and vegetable oils," said FAO analyst Peter Thoenes.

The FAO Dairy Price Index fell by 3.0 percent, driven by declining quotations and global import demand for skim and whole milk powders, due largely to disruptions in the dairy supply chains because of the containment measures aimed at controlling the spread of COVID-19.

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