ROME – Diminished tightness in the world supply/demand balance, signs of global economic weakness and a stronger US dollar contributed to sharp declines in global food prices, the Food and Agriculture Organization of the United Nations said on June 7.
Issuing its monthly food price index, the FAO said the benchmark fell 4 percent in May to 204 points, down 9 points from April. The drop left the index at the lowest level since September 2011, down 14 percent from the peak of 238 in February 2011. “Crop prices have come down sharply from their peak level but they remain still high and vulnerable due to risks related to weather conditions in the critical growing months ahead,” said Abdolreza Abbassian, grain analyst at the FAO.
The FAO raised its world cereal crop forecast by 48.5 million tonnes to a record 2,419 million, up 3 percent from 2011. The organization said the upward revision was based on the prospective large US corn crop, still early in its growing season.
In a breakdown of the food price index by sector, the FAO meat index in May was 179, down 0.5 percent from April and down only 1.3 percent from the peak of 181 set in November 2011. The cereals price index was 221, down 1.1 percent from April and down 17 percent from the April 2011 peak of 265. The sugar price index was 295, down 9 percent from 324 in April and down 30 percent from the peak of 420 in January 2011. The oils price index was 234, down 7 percent from April and down 17 percent from the February 2011 peak of 281. The dairy price index was 164, down 12 percent from April and down 30 percent from the March 2011 peak of 234.