FAO: Indicators Shows Food Price Index Fell in October

By Staff Writer

ROME- The FAO index of food prices in October fell to its lowest level in eleven months, with a drop of 4 percent ( 9 points) compared to September. But prices remain generally higher than last year and very volatile, FAO said Thursday.

The fall was driven by a sharp decline in international prices of cereals, oils, sugar and dairy products. The meat prices were down the least. However, the November index of FAO, published Thursday, shows that prices last month were still 5 per cent higher than the same period of 2010.

The prospect of an increased supply of various commodities and uncertainty about the global economic situation is driving down the pressure on international prices, although to some extent this has been offset by strong underlying demand in emerging countries, which continue having a solid economic growth.

Much of the prices of agricultural commodities could therefore remain in the coming months below the peak levels recently, according to the semiannual reports of FAO's Food Outlook, released Thursday. The report collects and analyzes the evolution of global markets for food and feed.

In the case of cereals, which expect a record crop in 2011, the overall picture suggests that prices will remain relatively stable, although at a lower level until well into 2012.

Food Outlook for 2011 foresees a record production of cereals 2 325 million tonnes (up 3.7 percent from last year). The total increase includes an increase of 6 percent in wheat production, and increases of 2.6 percent for coarse grains and rice by 3.4 percent. Globally, annual grain consumption will keep pace with population growth, remaining stable at about 153 kg per person.

International prices of cereals have declined in recent months, with the FAO index for prices of cereals with 232 points in October, its lowest level in eleven months. But however the average cereal prices remain about 5 per cent higher in relation to last year, when they were at a high level.

The high sugar supply worldwide has pushed down prices since last June. The increased supply has also been felt in the dairy markets, while the high production of palm oil and the record harvest of sunflower seeds have depressed oil prices in recent months.