The FAO Food Price Index rose slightly in March based on higher dairy prices. The Index rose by 1 percent from February, but is still 1.7 percent lower than March of 2012 and nearly 11 percent below its peak in February 2011.

The Cereals Price Index remains virtually unchanged from February at 244 points. This is 7 points higher than March 2012 but well below its April 2008 peak. Higher maize prices, due to tightened US supplies, were offset by lower wheat prices in the first half of the month based on improved weather conditions. Unseasonably cold temperatures resulted in a significant rebound in wheat prices during the second half of the month.

The Fats/Oils Price Index fell 5 points from February, driven mainly by soyoil prices. Improved weather conditions in South America and expectations of a record soybean crush in the US contributed to the fall in prices, as did China's cancellation of several large soybean orders.

A massive 22 point jump in the Dairy Price Index accounts for the overall rise in the Food Price Index in March. This change in the Dairy Price Index is one of the largest ever recorded and is due mainly to prolonged hot, dry weather in Oceania, resulting in a steep drop-off in milk production. Unfavorable weather in Europe has limited pasture growth, exacerbating low dairy supplies.

The April edition of the Agricultural Market Information System was also released today. The report cites favorable prospects for all crops, setting the stage for weaker world commodities prices. A significant decline in grain prices can be accounted for by reports from the USDA indicating the largest planted maize area since 1936.

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