World food prices in seven-month dip, longest since 2009

World food prices tracked by the United Nations fell for a seventh month in October, the longest slide since 2009, adding to falling energy costs in slowing inflation and making nutrition more accessible.

An index of 55 food items fell 0.2% month-on-month to 192.3 points, the lowest since August 2010, the UN’s Rome-based Food & Agriculture Organization wrote in an online report. The index is stabilising, it said.

Food prices are falling amid an outlook for bigger grain crops, rising milk output as well as a recovery in US pork production. That is helping slow global inflation, already aided by a slump in oil prices, with Goldman Sachs forecasting world annual average consumer prices will rise 3.3% next year from 3.5% in 2014.

“On the consumer side, obviously there are tangibly lower prices across the board that should in some way filter down,” Abdolreza Abbassian, a senior economist at the FAO, said by phone from Rome. “With the kind of inventories we are building, the world can stand some declines in production next year.”

A second year of rising world grain stockpiles is expected to pad the buffer against harvest setbacks to the highest in 15 years, the FAO forecasts. The inventories outlook will probably weigh on grain prices until next season, Abbassian said.

The food-price index declined 6.9% year-on-year, falling from the year-earlier period for a 16th month, the longest such slide since 2000. The FAO said it made some revisions to how the index is calculated extending back to 1961.

The FAO’s index rose to a then-record in 2008, and surging food prices triggered more than 60 riots worldwide from 2007 to 2009, the US State Department estimates. After falling in 2009, food prices rose to a new record in 2011, contributing to civil unrest across the Middle East and North Africa that toppled governments in Tunisia and Egypt.

A gauge of dairy fell 1.9% from September, the FAO said. Skimmed milk powder prices in Oceania fell 2.3% last month as milk output in New Zealand recovered from drought, according to the US Department of Agriculture, while Dutch milk powder prices fell 5.5% amid rising volumes in the EU. “Quotations for butter and whole and skimmed milk powder fell,” the FAO said.

The FAO meat price index fell 1.1% to 208.9, with restated numbers showing the gauge dropped for a second month from a record 212 points in August.

US pork prices are sliding as the hog herd recovers from an outbreak of viral disease. US boxed pork spot prices fell 20% in October, USDA data show.

“Pig meat prices have shown signs of weakness since July, as production recovered in some of the countries affected by outbreaks,” the FAO said.

“Pig meat prices have shown signs of weakness since July, as production recovered in some countries affected by outbreaks,” the FAO said.

Bloomberg


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