FAO trims food prices; brings down grain forecasts

The November issue of the FAO Food Outlook, a bi-annual international market report, released on Friday notes that fewer global cereal purchases coupled with reduced freights are very likely to bring down global expenditure on food this year.

Readjusting the forecasts for the worlds food import bill for 2012, FAO predicts a 10 percent decrease over the last year, with the annual global foodstuff import bill set to hover around the $1.14 trillion ton mark, a forecast that also heavily takes into account the lower than average food prices during the first 10 months of the year.

Averaging 213 points in October, the FAO Food Price Index also climbed down by one percent over last month, mainly off the back of depressed international prices of cereal and fats which successfully managed to offset the steady price hikes seen for other commodities including dairy and meat.

However, despite statistics showing a slight easing off of pressure from global food prices, FAOs global index continues to hover dangerously close to the price levels seen before the 2008 world food crisis which saw price spikes inducing riots across various countries.

Continuing pressure from grains remains a concern late into the year, as the Food Outlook reports that the balance between global cereal supply and demand is set to tighten significantly in 2012/13 as a consequence of the declines in maize and wheat outputs.

The years droughts in the key producing regions including the Black Sea has cut wheat output in Russia and Ukraine by as much as 30 percent, while the US corn belt disaster has been the primary factor behind the year-on-year decrease in global wheat production, which has now been forecast at 856 million tons, 3.2 percent down from last year.

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