World food prices rise
Bad weather causing the surge
World food prices rose in September and are seen remaining close to levels reached during the 2008 food crisis, the United Nations’ food agency said, while cutting its forecast for global cereal output.
The worst drought in more than 50 years in the United States sent corn and soybean prices to record highs over the summer, and, coupled with drought in Russia and other Black Sea exporting countries, raised fears of a renewed crisis.
Grains prices have retreated in recent weeks due to rapid harvest progress and concerns about weak demand in a slowing global economy.
But the Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, rose 1.4 per cent to an average of 216 points in September after remaining stable at 213 points in August.
The rise reflected mainly higher dairy and meat prices, with more contained increases for cereals, it said.
“Prices are remaining high... prices are sustained, it’s highly unlikely we will see a normalisation of prices anytime soon,” FAO senior economist Abdolreza Abbassian said.
He added, however, that it was not clear whether the small increase in September meant prices were now on an upward trend, but he expected volatility in markets could intensify in coming months.
Parmjit Singh, head of the food and drink sector at law firm Eversheds, said higher prices would place further pressure on squeezed international food supply chains.
“Manufacturers and producers will naturally want to pass on increased costs to their clients but they will meet with stiff resistance from retailers who are reluctant to increase checkout prices for increasingly value-conscious customers,” Singh said. FAO’s index is below a peak of 238 points hit in February 2011, when high food prices helped drive the Arab Spring uprisings in the Middle East and North Africa, but current levels are very close to those seen in 2008 which sparked riots in poor countries.
The Rome-based agency said it had cut its 2012 world cereals output forecast by 0.4 per cent to 2.286 billion tonnes from a previous estimate of 2.295 billion tonnes, mainly due to a smaller maize crop in central and southeastern parts of Europe, where yields have been hit by prolonged dry conditions.
It also decreased its forecast for world cereal stocks at the end of the 2013 season to 499 million tonnes, down four million tonnes from its projection last month.