The Food and Agriculture Organization Food Price Index averaged 215 points in November 2011, down 1 point from October, down 23 points, or 10%, from the all-time high of 238 points registered in February 2011 but up 2 points from November 2010. Even if the index continues to decline in December, it was certain that 2011 world food prices, as measured by the index, will be the highest for any year on record.
The food price index consists of the average of five commodity group price indices (meat, dairy, cereals, oils and fats, and sugar) weighted with an average export share of each of the groups for 2002-2004. The F.A.O. said of the November results, “Among the various commodities, a recovery of oils quotations compensated for a decline in sugar, while prices of the other commodity groups were little changed.”
The F.A.O. cereal price index averaged 228 points in November, down 3 points, or 1%, from October and compared with 223 points a year earlier. “The small decline was mainly on the account of wheat, which lost 3% (6 points), following a marked upgrade in world supplies, mostly driven by larger output and stocks in the Russian Federation,” the F.A.O. said.
The F.A.O. oils and fats index at 235 points was up 11 points, or 5%, from October, reversing a downtrend that began in March. In November 2010, the index stood at 245 points. “Markets responded to a prospective tightening of global supply and demand for vegetable oils,” the F.A.O. said. “In particular, the recent rise in prices reflects concerns about the anticipated slowdown in palm oil and soyoil output, increased absorption of vegetable oils by the biodiesel industry and rising import demand by China and other players.”
The meat price index averaged 177 points in November, virtually unchanged from October but up from 161 points in November 2010. The F.A.O. noted, “Pig meat prices were the only ones recording an increase of significance, in the order of 2% (3 points), while poultry, bovine and sheep meat prices were little changed.”
The dairy price index average 201 points in November, down 1% (3 points) from October and compared with 208 points in November 2010. The decline reflected a weakening of butter and cheese prices, which declined 6% and 2%, respectively, while skim milk powder, whole milk powder and casein prices registered gains in the order of 2% to 3%.
The sugar price index averaged 340 points in November, down 6% (21 points) from October and down 15% (60 points) from its July 2011 peak. The index was at 373 points in November 2010. “The decline largely reflects expectations of a large global production surplus over the next 12 months, on the back of good harvests in India, the European Union, Thailand and the Russian Federation,” the F.A.O. said.