World food prices dive to record low
Source: Bloomberg News |
November 4, 2011, Friday
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WORLD food prices fell the most in 19 months last month as grain, dairy and cooking oils slumped on speculation food demand will be reduced by the economic slowdown.
An index of 55 food commodities fell for a fourth month to 216 points from 225 points in September, according to the United Nations' Rome-based Food and Agriculture Organization. The 4 percent drop was the biggest since March last year. The gauge reached a record 238 points in February.
The FAO price index's four-month drop is the longest since a slide from July 2008 to February 2009, when the gauge fell 37 percent from its previous peak of 224 points in June 2008. The gauge is still above the year-earlier level of 205 points.
The FAO said: "The decline reflects sharp decreases in international prices of commodities. The continuing decline in the monthly value of the FAO cereal price index reflects this year's prospects for a strong production recovery and slow economic growth in many developing countries weighing on overall demand."
The cereal-price index fell to 232 points from 245 the previous month, the lowest level since November last year. Corn prices in Chicago averaged US$6.32 a bushel in October, down from about US$6.94 the previous month, as a slowdown may curb use of the grain as feed or biofuels.
The FAO's price gauges for meat, dairy, cooking oil and sugar also declined.
Production of most food commodities will have to rise next year to meet expected demand, the FAO said in an outlook report yesterday. There is room for "some optimism" that prices will remain below peak levels next year, it said.
"The general picture still points towards firm markets well into 2012," the UN agency said. "If this demand were to rise faster than currently envisaged, which is a possibility even assuming a slow economic recovery, then a more significant production expansion will be required."
World cereal production will climb 3.7 percent to 2.33 billion tons in 2011-12, the FAO said, raising its September outlook by 14.8 million tons on increased forecasts for wheat, coarse grains and rice.
The FAO forecast the world food import bill will rise 24 percent to a record US$1.29 trillion this year from US$1.04 trillion in 2010
An index of 55 food commodities fell for a fourth month to 216 points from 225 points in September, according to the United Nations' Rome-based Food and Agriculture Organization. The 4 percent drop was the biggest since March last year. The gauge reached a record 238 points in February.
The FAO price index's four-month drop is the longest since a slide from July 2008 to February 2009, when the gauge fell 37 percent from its previous peak of 224 points in June 2008. The gauge is still above the year-earlier level of 205 points.
The FAO said: "The decline reflects sharp decreases in international prices of commodities. The continuing decline in the monthly value of the FAO cereal price index reflects this year's prospects for a strong production recovery and slow economic growth in many developing countries weighing on overall demand."
The cereal-price index fell to 232 points from 245 the previous month, the lowest level since November last year. Corn prices in Chicago averaged US$6.32 a bushel in October, down from about US$6.94 the previous month, as a slowdown may curb use of the grain as feed or biofuels.
The FAO's price gauges for meat, dairy, cooking oil and sugar also declined.
Production of most food commodities will have to rise next year to meet expected demand, the FAO said in an outlook report yesterday. There is room for "some optimism" that prices will remain below peak levels next year, it said.
"The general picture still points towards firm markets well into 2012," the UN agency said. "If this demand were to rise faster than currently envisaged, which is a possibility even assuming a slow economic recovery, then a more significant production expansion will be required."
World cereal production will climb 3.7 percent to 2.33 billion tons in 2011-12, the FAO said, raising its September outlook by 14.8 million tons on increased forecasts for wheat, coarse grains and rice.
The FAO forecast the world food import bill will rise 24 percent to a record US$1.29 trillion this year from US$1.04 trillion in 2010
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