The United Nations Food and Agriculture Organization (FAO) said on Thursday that world food prices fell sharply in March due to the impact of demand linked to the outbreak of the Corona virus and the decline in global oil prices.

The FAO Food Price Index, which measures monthly changes to a basket of grains, vegetable oils, dairy products, meat and sugar, averaged 172.2 points in March, down 4.3 percent from February.

FAO has slightly raised its forecast for cereal production, as it expects global production to reach 2.721 billion tons in 2019, compared to previous expectations that it will reach 2.719 billion tons, an increase of about 2.4 percent over 2018 production.

The FAO Sugar Price Index recorded the largest decline, dropping 19.1 percent from the previous month. This decrease is due to the decrease in consumption associated with the general isolation measures associated with the virus in many countries and the decrease in demand from ethanol producers due to the recent drop in crude oil prices.

The vegetable oil price index fell 12 percent due to the decline in palm oil prices, which is linked to the decline in the prices of mineral oils, and increased uncertainty about the impact of the Corona virus on the market.

The grain price index fell 1.9 percent, while rice prices bucked the general trend and rose for a third month in a row, supported by warehousing operations, due to concerns about the Corona virus and news that Vietnam may impose export restrictions.

Although FAO raised its forecast for cereal production in 2019, it expects wheat production in 2020 to remain unchanged at 763 million tons, approaching the record level recorded last year.