FAO Food Price Index eases in October

The FAO Food Price Index (FFPI) averaged 216 points in October 2011, down 4 percent, or as much as 9 points, from September and 22 points, or 9 percent, below its peak of 238 points reached in February 2011. The Index has been falling steadily since June and, in October,  dropped to an 11-month low, but still some 5 percent above the corresponding period last year. The decline reflects sharp decreases in international prices of all the commodities included in the Index.

The FAO Cereal Price Index averaged 232 points in October,  down 5 percent, or 13 points, from September,  15 percent below its peak in April 2008, though 5 percent, or 12 points, higher than in October 2010.  The historical values of the FAO Cereal Price Index have been slightly revised following the reintroduction of the India 25 percent broken rice quotations in the computation of the FAO Rice Price Index. The continuing decline in the monthly value of the FAO Cereal Price Index reflects this year’s prospect for a strong production recovery and slow economic growth in many developed countries weighing on overall demand, particularly from the feed and biofuels sectors.

The FAO Oils/Fats Price Index averaged 223 points in October, down 15 points, or 6 percent,  from September, accelerating the gradual price decrease that started last March. The sizeable drop in the index reflected ample soybean crops in South America, strong palm oil output in Southeast Asia and the confirmation of record sunflower seed crops in the Black Sea region, which coincided with a slowdown in global import demand and downward pressure spilling over from other markets, in particular the international grain markets.

The FAO Meat Price Index averaged 177 points in October, marginally down from September but still 12 percent, or 19 points, above the corresponding period a year ago and only 3 points down from its 20-year high recorded in April 2011. Over the first ten months, meat prices averaged much higher in 2011 than last year, with year-on-year gains the strongest for ovine meat, up 36 percent,  followed by beef and poultry, up 18 percent and 16 percent, respectively.

The FAO Dairy Price Index averaged 204 points in October, down 5 percent from September and stood 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 US Dollar, which promoted competition among exporters, as import demand remains firm.

The FAO Sugar Price Index averaged 361 points in October, down 5 percent from September and 10 percent from the peak it reached in July 2011. Sugar prices have declined following better than earlier anticipated output in Brazil, the world leading sugar producer, but also in Europe, India, and Australia, combined with expectations of a slowing demand from the manufacturing and food preparation sectors.