FAO’s Food Price Index down three consecutive times

The UN Food and Agriculture Organisation’s (FAO) Food Price Index on July 5, 2012 fell for the third consecutive month in June 2012, dipping 1.8% from May to its lowest level since September 2010.

The four-point drop in June brought the index to 201 points from a revised level of 205 points in May 2012, according to the UN food agency.

The index now stands at 15.4% below its peak in February 2011. “The average prices of all commodity groups in the Index were below May levels, with the largest drop registered for oils and fats,” said the FAO.

The Food Price Index is a measure of the monthly change in average international prices of a basket of 55 food commodities.

The FAO linked the fall of the index to the continued economic uncertainties and generally adequate food supply prospects although growing concerns over dry weather sent prices of some crops higher toward the end of the month.

The Rome-based agency observes that food commodity prices have started rising again recently, mostly because of adverse weather and this may result in a rebound of the Food Price Index in July.

It also lowered its forecast for 2012 world cereal production by more than 23 million tonnes from May, which is likely to result in a smaller build-up of global stocks by the end of seasons in 2013.

The FAO’s new forecast for world cereal production in 2012 stands at 2,396 million tonnes, still a record level and 2% up from the previous high registered last year.

By Ekow Quandzie