Global food prices drop to 11-month low in October, UN agency reports
Food prices dropped to an 11-month low in October, the United Nations Food and Agriculture Organization (FAO) said today, while adding that they are still higher than last year and very volatile.
FAO’s Food Price Index averaged 216 points last month, down 4 per cent from September, the agency said in a news release. The index is a measure of basic food prices at the global level.
“The drop was triggered by sharp declines in international prices of cereals, oils, sugar and dairy products,” said FAO. “Meat prices declined the least.”
The agency attributes the decline to an improved supply outlook for a number of commodities and uncertainty about global economic prospects.
Most agricultural commodity prices could remain below their recent highs in the months ahead, according to FAO’s biannual Food Outlook report, which analyzes developments in global food and feed markets and was also published today.
A record harvest is expected this year for cereals, states the Outlook, which forecasts a record 2,325 million tons – 3.7 per cent above last year. Cereal prices are expected to stay relatively firm well into 2012.
FAO said that global cereal prices have declined in recent months, with the Cereal Price Index registering an 11-month-low of 232 points in October. Prices, on average, however remain 5 per cent higher than last year’s already high level.
The agency added that recent floods and their impact on Thailand’s rice production has had limited consequences on the global market thanks to large reserves.
Also, large global supplies of sugar have put downward pressure on sugar prices since June. Improved supplies also weighed on dairy markets while strong palm oil output and record sunflower seed crops have driven prices down in the oils sector in recent months.
The Outlook notes that prices generally remain “extremely volatile,” moving in tandem with unstable financial and equity markets. “Fluctuations in exchange rates and uncertainties in energy markets are also contributing to sharp price swings in agricultural markets,” said FAO Grains Analyst Abdolreza Abbassian.
High food prices, according to the Outlook, are putting pressure on the world’s poorest nations, with the food import bills of the least developed countries (LDCs) soaring by almost a third from last year. The global cost of national food imports is expected to approach $1.3 trillion this year.
The new issue of the Outlook also includes a chapter on the new Agricultural Market Information System (AMIS), established by the Group of 20 leading economies (G-20) earlier this year and housed at FAO headquarters in Rome.
AMIS, managed by a joint Secretariat composed of nine international organizations, has the capacity to collect, analyse and disseminate information on a regular basis regarding the current and future food market situation and food policies.