World Food Prices Drop Most in 19 Months on Grain, Dairy Slump
World food prices fell the most in 19 months in October as grains, dairy and cooking oils slumped on speculation food demand will be crimped by economic slowdown.
An index of 55 food commodities fell for a fourth month to 216 points from 225 points in September, the United Nation’s Rome-based Food and Agriculture Organization said in an e- mailed report. The 4 percent drop was the biggest since March 2010. The gauge rose to 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 decline reflects sharp decreases in international prices of all the commodities included,” the FAO said in the report. “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 $6.32125 a bushel in October, down from about $6.93875 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 today. 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 metric 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 $1.29 trillion this year from $1.04 trillion in 2010, driven by rising spending on grain-based products and vegetable oils.
Higher food costs have sent “tens of millions of people” into poverty since late 2010, and the world’s hungry people may soon exceed 1 billion again, humanitarian group Oxfam International said Aug. 3. The number of malnourished people in the world fell last year to 925 million from 1.02 billion in 2009, according to the FAO.
World food output will have to rise 70 percent by 2050 as the global population climbs to 9.2 billion from an estimated 6.9 billion in 2010, the FAO estimates. The price of staple foods including corn will more than double in two decades without action, Oxfam said in May.
Growth in agricultural output will slow to 1.7 percent a year through 2020, compared with 2.6 percent in the previous decade, the FAO and the Paris-based Organization for Economic Cooperation and Development said in a report in June.
The FAO, set up in 1945 as a specialized UN agency, says it leads international efforts to defeat hunger and helps developing countries improve farming. Its mandate includes lifting nutrition levels and agricultural productivity.
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