ROME—While global food prices dropped to an 11-month low, declining 4% from September, prices remain generally higher than last year and remain "extremely volatile," moving in tandem with unstable financial and equity markets, according to new statistics released today by the United Nation’s Food and Agriculture Organization (FAO).
The UN’s Food Price Index, which measures monthly price changes in a basket of foods including cereals, oilseeds, dairy, meat and sugar, averaged 216 points in September—down from 225.2 points in September. The 4% drop was the biggest since a record high of 237 set in February 2010. The decline was triggered by sharp declines in international prices of cereals, oils, sugar and dairy products.
"Fluctuations in exchange rates and uncertainties in energy markets are also contributing to sharp price swings in agricultural markets," FAO Grains Analyst Abdolreza Abbassian said.
The Cereal Price Index registered an 11-month low of 232 points in October. Nonetheless cereal prices, on average, remain 5% higher than last year's already high level. And with a record harvest expected in 2011, cereal prices are predicted to stay relatively firm, although at reduced levels, well into 2012.
The Oils/Fats Price Index averaged 223 points in October, down 15 points, or 6%, from September, accelerating the gradual price decrease that started last March. Strong palm oil output and record sunflower seed crops have driven prices down in the oils sector in recent months.
The Meat Price Index averaged 177 points, marginally down from September but 12%, or 19 points, above the corresponding period a year ago and only 3 points down from its 20-year high recorded in April 2011.
The Dairy Price Index averaged 204 points in October, down 5% from September and remained at around the same level as in October 2010. The decline of prices in recent months reflects improvements in world export availability and a fall in the value of the Euro in relation to the U.S. Dollar.
The Sugar Price Index averaged 361 points in October, down 5% from September and 10% from the peak it reached in July 2011. Sugar prices have declined following better than earlier anticipated output in Brazil, Europe, India and Australia, combined with expectations of a slowing demand from the manufacturing and food preparation sectors.
