Despite end-of-year decline, 2011 food prices highest on record- UN

14 Jan, Xinhua

The United Nations agricultural agency on Thursday reported that although global food prices declined in December, the overall annual average was the highest ever on record. Last month, Food Price Index level of the Food and Agriculture Organization (FAO) was 211 points, 27 points below its peak in February 2011. The decline was driven by sharp falls in the international prices of cereals, sugar and oils due to a productive harvest coupled with a slowing demand and a stronger U. S. dollar.

However, despite the steady decline in prices during the second half of the year, the Index overall averaged 228 points in 2011— the highest average since FAO started measuring international food prices in 1990.

The second highest average occurred in 2008 at 200 points, FAO said.

International prices of many food commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead.

“International prices of many food commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead,” said FAO Senior Grains Economist Abdolreza Abbassian.

Cereal prices registered the biggest fall due to record crops and an improved supply outlook, with the FAO cereal price index dropping 4.8 percent last month. Maize prices fell by six per cent, wheat by four percent, and rice by three per cent. However, the cereal price index for the year rose by 35 percent from 2010, the highest since the 1970s.

The oils and fats price index also dropped, with a three per cent decline from November due to the unexpected surge in supplies of vegetable oil — mainly of palm and sunflower oil — which, coupled with poor global demand for soybeans, deflated prices.

Meat prices were slightly down from November, mainly due to the 2.2 percent drop in pig meat prices, but as with other commodities, its annual price was 16 percent higher than in 2010, the UN agency said.

Dairy prices remained almost unchanged, and the sugar price index declined for the fifth consecutive month, reflecting expectations of a large sugar world production surplus over the new season due to good harvests in India, the European Union, Thailand and Russia, FAO said.