World food price fell for a third month in September, the longest stretch of declines in more than two years, after grain prices slumped amid concern demand will be hurt by an economic slowdown.
An index of 55 food commodities fell to 225 points last month from 229.5 points in August, the United Nation’s Rome-based Food and Agriculture Organisation said. The gauge reached a record 237.7 points in February.
Corn futures in Chicago had the biggest monthly slide in at least 50 years last month, dragging down other grains and taking pressure off rising living costs across the world. China’s fourth-quarter consumer price index probably rose 4.5 per cent, down from 5 per cent in the third quarter, according to the median of nine estimates.
“The only reason prices are coming down is the economic slowdown,” Abdolreza Abbassian, a senior economist at the FAO, said by phone before the report. “If we get more bad demand news, I wouldn’t be surprised to see prices go lower.”
The global economy will expand 4 per cent this year and next, the International Monetary Fund said Sept. 20, cutting its June forecasts of 4.3 per cent in 2011 and 4.5 per cent in 2012.
The last time the FAO food-price index dropped more than two months in a row was between July 2008 and February 2009, when the index slumped 37 per cent from its previous peak of 224.1 points in June 2008. The gauge is still 16 per cent above its year-earlier level of 194 points.
Stocks and commodities dropped last month on concern about a possible Greek default and a spreading debt crisis in Europe. The MSCI Index of stocks fell 9.7 per cent in September and the S&P GSCI Index of commodities dropped 12 per cent. U.S. supplies of corn were an estimated 1.128 billion bushels on Sept. 1, the Department of Agriculture said.
Sept. 30, about 20 per cent more than the average prediction of 24 analysts in a Bloomberg survey and signaling slower demand for grain used in animal feed and fuel. “The key to the falling prices is what’s happening on the demand side,” the FAO’s Abbassian said.
Corn dropped 23 per cent on the Chicago Board of Trade in September, the biggest monthly decline in records going back to 1959. Wheat plunged 23 per cent in the month, the biggest such drop since March 1974. The FAO Cereals Price Index dropped to 245.1 points in September from 252.4 in August, the lowest level since January.
The price slide may attract buyers, according to Abbassian. Countries will spend a record $1.29 trillion on food imports in 2011, 21 per cent more than in 2010, the FAO estimates. “A lot of people will say this is an opportunity so they’re going to buy now,” Abbassian said.
“All you need is a couple million tons of purchases and that puts the market back up. The upside can be very fast.” The price of corn in Chicago is still 26 per cent higher than a year earlier and rough rice has advanced 27 per cent. Wheat has dropped 4.4 per cent in the period.
Higher food costs have sent “tens of millions of people” into poverty since late 2010, and the world’s hungry people may soon exceed 1 billion again, Oxfam International said Aug. 3. The number of malnourished people in the world fell last year to 925 million from 1.02 billion in 2009, according to the FAO.
World food output will have to rise 70 per cent by 2050 as the global population climbs to 9.2 billion from an estimated 6.9 billion in 2010, the FAO estimates. The price of staple foods including corn will more than double in two decades without action, Oxfam said in May.
Growth in agricultural output will slow to 1.7 percent a year through 2020, compared with 2.6 percent in the previous decade, the FAO and the Paris-based Organization for Economic Cooperation and Development said in a report in June.
World cereal production will climb to 2.31 billion tons in 2011-12, the FAO said in a separate report today, raising its estimate by 3 million tons on increased forecasts for wheat and rice production.
The FAO, set up in 1945 as a specialized UN agency, says it leads international efforts to defeat hunger and helps developing countries improve farming. Its mandate includes lifting nutrition levels and agricultural productivity.