Bloomberg News

World Food Prices Fell to 14-Month Low in December, UN Says

January 12, 2012

(Updates to add food-index components in 10th paragraph.)

Jan. 12 (Bloomberg) -- World food prices fell to a 14-month low in December, led by declines in grains, sugar and oilseeds, the United Nations’ Food and Agriculture Organization said.

An index of 55 food items fell 2.4 percent to 211 points from a revised 216.1 points in November, the Rome-based FAO said on its website today. The month-earlier figure was revised from 215 points, while October was restated at 215.8 points from 216.

Food prices will probably decline this year, Jose Graziano da Silva, who became FAO director general this month, said Jan. 3. Prices have dropped 11 percent since reaching a record in February, lowering costs that drove global inflation higher and giving central banks greater scope to ease monetary policy in a bid to shore up economic growth.

“The trend is down and can continue, it’s a very slow decline,” said Abdolreza Abbassian, a senior economist at the FAO. “Prices are declining but they’re not declining to a low level, and there are a lot of upside risks.”

The food index dropped year-on-year for the first time since November 2009. Inflation in China, the world’s second- biggest economy after the U.S., declined to a 15-month low in December, the National Bureau of Statistics reported today.

Soybean futures rose 6.8 percent in Chicago in December and corn climbed 6.3 percent amid concern that dry and hot weather in Argentina and southern Brazil will cut production.

Record Index Average

The index averaged a record 228 points last year, 23 percent more than in 2010 and above the 200 points recorded in 2008, when food riots erupted from Haiti to Egypt. The index began in 1990.

“If the prices are going to hover around these levels, we could see some declines but don’t expect a sharp fall, then really it’s going to be quite expensive to import food,” Abbassian said in an interview with Bloomberg Television. “For many poorer countries that import both food and oil it’s going to be a very challenging year indeed.”

The sugar-price index tracked by the FAO slumped to 326.9 points from 339.9 in November, the lowest in seven months. White, or refined, sugar futures traded in London slipped 1.9 percent last month following an 11 percent slump in November.

The index of edible oils and fats dropped to 227.5 points from 234.8, while the gauge of cereal prices dropped to 217.8 points from 228.8. The meat and dairy indexes were little changed at 179.3 points and 201.7 points.

--Editors: John Deane, Alastair Reed

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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