Already a Bloomberg.com user?
Sign in with the same account.
(Updates with grain outlook in seventh paragraph, sugar index in 10th.)
Dec. 8 (Bloomberg) -- World food prices dropped for a fifth month in November, the longest slide in more than two years, amid signs commodity prices may be “bottoming out,” the United Nations’ Food and Agriculture Organization said.
An index of 55 food items fell 0.5 percent to 215 points from 216 in October, the Rome-based FAO said on its website today. The gauge slipped 4 percent in October, the biggest drop since March 2010, after rising to a record 237.7 in February.
The food index was higher than the year-earlier periods for the past two years, raising the cost of living across the world. Chinese November consumer prices probably rose 4.5 percent from a year earlier, according to 35 economist estimates compiled by Bloomberg, exceeding a government target of 4 percent.
“Generally speaking, we are in many aspects bottoming out,” Abdolreza Abbassian, a senior economist at the FAO, said by phone yesterday. “Prices are bottoming out for many commodities in spite of high supplies.”
Drought in Ukraine may be supporting grain prices, according to Abbassian. The country’s winter grains sprouted on 71 percent of seeded areas as dry weather damaged crops, the Agriculture Ministry reported yesterday.
“We have had these huge production numbers coming in and the decline in prices has been relatively modest,” Abbassian said from Moscow. “People are talking about the drought problem in Ukraine.”
World cereal production will climb 3.5 percent to a record 2.32 billion metric tons in 2011-12, the FAO forecast, cutting its estimate by 2.4 million tons from a month ago on a reduced outlook for coarse grain and rice harvests.
The FAO price index’s five-month drop is the longest since 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 212.9 points.
“A recovery of oils quotations compensated for a decline in sugar, while prices of the other commodity groups were little changed,” the FAO said.
The sugar price index tracked by the FAO slumped to 340.3 points from 361.2 in October, the lowest level in 13 months. White, or refined, sugar futures slumped 11 percent in London last month amid expectations for increased supplies.
“The decline largely reflects expectations of a large global production surplus over the next 12 months, on the back of good harvests in India, the EU, Thailand and the Russian Federation,” the FAO said.
The index of edible oils and fats jumped to 235 points from 224.3 the previous month. Crude palm-oil prices advanced 2.7 percent last month on the Malaysia Derivatives Exchange.
“The recent rise in prices reflects concerns about the anticipated slowdown in palm oil and soy oil output, increased absorption of vegetable oils by the biodiesel industry and rising import demand by China,” the UN agency said.
The FAO’s gauge of cereal prices dropped to 228.4 points from 231.3, the meat price index rose to 177.2 points from 176.5 and the dairy price indicator slipped to 201 from 203.5, according to the report.
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.
--Editors: Claudia Carpenter, John Deane
To contact the reporter on this story: Rudy Ruitenberg in Paris at email@example.com
To contact the editor responsible for this story: Claudia Carpenter at firstname.lastname@example.org