Bloomberg News

World Food Prices Fell Third Month in December on Grain Plunge

January 10, 2013

World food prices fell for a third month in December as the cost of grains and oilseeds declined, the United Nations’ Food & Agriculture Organization said.

An index of 55 food items tracked by the FAO fell to 209.3 points from a restated 211.7 in November, the Rome-based agency wrote in an e-mailed report today. The index averaged 211.6 for the year, down from a record 227.6 points in 2011.

Wheat futures dropped 9.9 percent last month in Chicago, the biggest monthly slide since September 2011, while corn fell 7.2 percent and soybeans declined 2 percent. The food price index is still above its June level of 200.4, which was the low for the year.

“The decline in December was led by drops in the international prices of major cereals and oils,” the FAO wrote. “Cereal export quotations dropped because of weaker demand for feed and industrial uses.”

The global food-import bill was forecast to fall 9.7 percent in 2012 to $1.14 trillion from a record $1.26 trillion in 2011 on lower freight costs and less spending on vegetables and fruits, grains and sugar, the FAO said in November.

The FAO’s gauge of world grain prices declined 2.3 percent to 249.6 points from 255.6. Corn prices dropped as export supplies in South America relieved pressure from tight availability in the U.S., the UN agency said.

The December index for fats and oils dropped to 196.5, the lowest level since August 2010, from 200.4 the previous month, the FAO reported. Palm oil futures in Malaysia dropped 23 percent last year on record stocks in the country, the world’s second-largest producer behind Indonesia.

The index of sugar prices dropped to 273.8 points from 274.5 points in November, to the lowest level since August 2010. The FAO dairy-price index rose to 196.8 points from 195, the data showed. The index for meat prices dropped to 175.6 points from 177.

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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