Milan: World food prices dipped month-on-month in November but remained at high levels with further scope to rise due to future supply concerns, the United Nations’ food agency said on Thursday.
Global food prices measured by the UN’s Food and Agriculture Organization (FAO) hit a peak in February but have been falling since June as crops improved and concerns about global economic slowdown reined in demand growth.
“I’d rather say it is a slowdown in decline,” FAO’s senior economist Abdolreza Abbassian told Reuters after the FAO index of global food prices showed a one point monthly fall in November.
The index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged at 215 points in November, 10% below its peak in February but remained 1% above the November 2010 level, the FAO said in a statement.
“It is more stabilizing at high levels than a downturn ... The upside risk is still there,” Abbassian said in a telephone interview. High food prices have helped fuel inflation and contributed to civil unrest and the Arab Spring earlier this year.
The European Central Bank cut interest rates by a quarter of a point on Thursday to counter the twin threats of recession and deflation in the euro zone, and is expected to unveil fresh measures to help banks hurt by the bloc’s debt crisis.
The fall in November food prices was moderate with a 5% rise in vegetable oils cushioning a 6% fall in sugar. The prices of cereals, one of the main components of the FAO index, fell 1% from October, largely driven by a 3% fall in wheat prices.
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Global grain stocks, beefed up after strong crops in Russia and some Asian countries, were at comfortable levels this season, Abbassian said.
Next season’s supply situation remained uncertain with weaker grain crops expected in Ukraine and presidential elections in Russia which could influence Moscow’s export policy, he said.
A considerable increase in the global grain output would be needed next year if demand kept rising, he added.
The Rome-based FAO put world cereals stocks at the end of the 2012 season at 511 million tonnes, up 5 million tonnes from the previous forecast and 10 million tonnes higher than the previous year.