Global food prices fell in August for the fourth month running, according to the United Nations’ food agency, which again raised its 2013-14 forecast for grain production.
The Food and Agriculture Organization (FAO) said on Thursday that cheaper food last month reflected declines in corn, wheat and edible oils prices.
Food prices surged during the summer of 2012 due to a major drought in the U.S. but prospects for a rebound in cereal supplies to record levels have reversed the price trend this year.
The FAO price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 201.8 points in August, about 1.9 per cent below July’s level and the lowest since June 2012.
FAO said it expected global cereal production in 2013-14 to increase to a record 2.492 billion tonnes, up 0.5 per cent from its July forecast and 7.7 per cent higher than 2012 output.
FAO senior economist Abdolreza Abbassian told Reuters the prospect of bumper crops was now factored in by markets, so the rate of price declines may ease in coming months.
“We are almost at the bottom. Further declines are likely to be much less than those seen over the past few months,” Abbassian said.
He said the FAO was unlikely to raise its crop forecasts much further but there was some room for downward adjustments.
The FAO said it expected a 10.5 per cent expansion in coarse grain output to 1.285 billion tonnes and a 7.6 per cent rise in wheat production to 710 million tonnes in 2013-14.
The Rome-based agency slightly raised its forecast for world cereal stocks at the close of seasons ending in 2014 to 569 million tonnes, about 13 per cent higher than their opening levels and the highest since 2001-02.
FAO’s price index hit a record peak of 238 points in February 2011, when high food prices helped drive the Arab Spring uprisings in the Middle East and North Africa.
In the summer of 2012 the index began surging to levels close to another peak seen in 2008, in which year there were riots, some deadly, in several poor countries.
— Catherine Hornby is a Reuters correspondent based in Rome and reports on the United Nations’ food agencies.