World food prices drop 2.4% in December 2011 – FAO

Global food prices fell in December 2011 with the UN Food and Agriculture Organisation (FAO) Food Price Index released January 12, 2012 recording a drop of 2.4% or five points from November 2011.

At its new level of 211 points, the FAO said the index was 11.3% (27 points) below its peak in February 2011.

The decline was driven by sharp falls in international prices of cereals, sugar and oils. Prices of oil stood at 227 points in December, down 3% from November with cereal prices which recorded the biggest fall dropping 4.8% to 218 points in December.

The FAO Sugar Price Index declined for the fifth consecutive month to 327 points in December, down 4% from November and 18% from its July 2011 peak.

“The decline was driven by sharp falls in international prices of cereals, sugar and oils due to bumper 2011 crops coupled with slowing demand and a stronger US dollar. Most commodities were affected,” said the UN food agency in a statement.

However, the statement added “although prices dropped steadily in the second half of 2011, the index averaged 228 points in 2011 — the highest average since FAO started measuring international food prices in 1990. The previous high was in 2008 at 200 points.”

As to whether food prices will trend downwards, a senior economist at the FAO Abdolreza Abbassian said “it was difficult to make any firm prediction on price trends for the coming months.”

“International prices of many food commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead,” Abbassian was quoted in the statement as saying.

By Ekow Quandzie