Food price Index down by 8 per cent -FAO

FAO Food Price Index fell one percent in October 2012. In the first ten months of this year food prices were eight percent lower than in the same period in 2011.The decline was largely due to lower international prices of cereals and oils and fats, which more than offset increases in dairy and sugar prices. The Index dipped two points to 213 points from Septembers revised level of 215 points. Also a bi-annual global market report also published today, noted that lower international prices and freight rates, together with lower cereal purchases, could push down the world food import bill in 2012.Global expenditure on food imports was forecast at $1.14 trillion in 2012, 10 percent lower than last years record level. According to Food Outlook, the balance between global cereal supply and demand is forecast to tighten considerably in 2012/13, due mainly to likely declines in wheat and maize outputs. World cereal production is forecast to fall by 2.7 percent from previous years record crop, leading to a 25 million tonnes contraction in world stocks. “Despite tight markets, a set of conditions and measures have so far stopped international food prices from spiraling up as they did in 2007-2008 and 2009-2010,”said the FAO Director-General JosÃ© Graziano da Silva Graziano da Silva said among other drivers of modest food prices are the improved international coordination and market transparency brought about by the G20s Agricultural Market Information System (AMIS), which has helped to prevent panic and to stop the worst drought in decades turning into a food price crisis as has happened in the past. “”Droughts or floods are not what causes crises, its lack of governance. In a globalized world, we cannot have food security in only one country or in one region. We need to strengthen the global governance of food security,” added Graziano da Silva.FAO Cereal Price Index remained 12 percent higher than in October last year, it fell 1.2 percent from September, mostly because of slightly lower wheat and maize prices.Current wheat prices reflect reduced trade activity, while maize values are down, mostly due to slowing demand from the livestock and industrial sectors. For wheat, world trade in 2012/13 is forecast to fall below the previous seasons peak. Prices are expected to stay above 2011 levels.For coarse grains, the market is also expected to remain extremely tight in 2012/13, with FAOs latest forecast for production in 2012 pointing to a 2.5 percent decline from the 2011 record level. Stocks are forecast to fall to historic lows.World rice production in 2012 may surpass last seasons record, supported by favourable growing conditions. Steady import demand, together with very ample export supplies, are sustaining an expansion of trade in 2012, with a further, albeit small, increase foreseen in 2013.World cassava output is expected to increase vigorously in 2012 and may continue to do so in 2013, sustained by growth in Africa, where cassava remains a strategic crop for both food security and poverty alleviation.World sugar production is forecast to reach a new record, more than covering projected global sugar consumption. Large export availabilities in key supplying countries, along with a rebuilding of sugar inventories in major importing countries, are expected to boost trade in 2012/13.The FAO Sugar Price Index averaged 288 points in October, up 1.6 percent from September, but down 20.2 per cent from October last year.

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Food price Index down by 8 per cent -FAO