World food prices fell to almost a seven-year low at the start of the year on the back of sharp declines in commodities, particularly sugar, according to the latest data from the United Nations (UN).

The Food Price Index, published by the UN's Food and Agriculture Organization (FAO), averaged 150.4 points in January, down 16 percent from a year earlier and registering its lowest level since April 2009.

The trade-weighted index tracks international market prices for five key commodity groups -- major cereals, vegetable oils, dairy, meat and sugar – on a monthly basis.


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The main factors underlying the lingering decline in basic food commodity prices are "the generally ample agricultural supply conditions, a slowing global economy, and the strengthening of the U.S. dollar," the FAO noted. Food commodities are not the only ones suffering from demand failing to keep up with a glut in supply with oil prices suffering a similar fate with a steady decline since mid-2014.

Signaling no let-up in production, the food agency raised its forecasts for worldwide cereal crops in 2016. "As a result of the upgraded production and downgraded consumption forecasts, world cereal stocks are set to end the 2016 seasons at 642 million tons, higher than they began," the agency noted.
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