Food prices lower, but volatile

World food prices declined by 4% to an 11-month low from September to October, but remain volatile.

World food prices declined by 4% to an 11-month low from September to October, but remain volatile and generally 5% higher than the same period last year. That’s according to the UN’s Rome-based Food and Agriculture Organisation (FAO’s) Food Price Index for November.

The drop was triggered by improved supply for a number of commodities, with uncertainty about the global economy putting further downward pressure on international prices. There were sharp declines in international prices of cereals, oils, sugar and dairy products.

Most agricultural commodity prices could remain below their recent highs in the months ahead, according to FAO’s biannual Food Outlook report. Prices of cereals are expected to remain relatively firm, although at reduced levels. A record cereal harvest of 2,33 billion tons – 3,7% above the previous year – is expected in 2011.

Large global supplies of sugar have put downward pressure on sugar prices since June and improved dairy supplies weighed on markets. Strong palm oil output and record sunflower seed crops have driven prices down in the oils sector. Meat prices declined the least.

World cereal inventories are forecast to rise 3,3% from their reduced opening levels, to 507 million tons by the end of season in 2012. – Staff reporter