The United Nation's Food and Agricultural Organization's (FAO) food price index dropped to an 11-month low in October, declining nine points, to 216 points from September. Still, prices remain higher than last year. The drop was triggered by sharp declines in international prices of cereals, oils, sugar and dairy products. Meat prices declined the least.
"An improved supply outlook for a number of commodities and uncertainty about global economic prospects is putting downward pressure on international prices, although to some extent this has been offset by strong underlying demand in emerging countries where economic growth remains robust," says FAO.
FAO also released its bi-annual Food Outlook, projecting 2011 cereal production at a record 2.325 million metric tons (MMT) -- 3.7% above the previous year. The overall increase comprises a 6.0% rise in wheat production, and increases of 2.6% for coarse grains and 3.4% for rice. Globally, annual cereal food consumption is expected to keep pace with population growth, remaining steady at about 153 kg per person, says FAO.
Additionally, FAO expects food prices to remain "extremely volatile" due to uncertainty in global financial and equity markets. "Fluctuations in exchange rates and uncertainties in energy markets are also contributing to sharp price swings in agricultural markets," FAO grains analyst Abdolreza Abbassian noted.