World food prices drop to lowest in 3 years

World food prices fell for a fifth month in September to the lowest level in three years, with grain prices sliding as production of corn and rice is expected to exceed demand.

An index of 55 food items tracked by the FAO fell to 199.1 points from a revised 201.4 in August, the Rome-based United Nations agency wrote in an online report today. The gauge is down from a record 237.9 points in February 2011 and at the lowest level since September 2010.

The decline in food prices was driven by a 6.1 per cent drop for grains, as all other components of the index rose, led by sugar, the FAO said. Global corn production will jump to 943.2 million tonnes (mt) in 2013-14 from 862.9 mt in the previous period, the International Grains Council forecast last week.

"The sharp decline in September follows an already sizable drop registered in the previous two months, reflecting a generally favorable supply outlook, particularly for maize and rice," the FAO said, using another name for corn.

The FAO's grain price index fell to 197.7 points last month after sliding 7.5 per cent to 210.6 in August, slipping to the lowest level since August 2010.

In a separate report, the FAO cut its outlook for 2013 world grain production by 3.1 mt to 2.49 billion tonnes on a reduced outlook for wheat output, still rising 7.7 per cent from 2.31 billion tonnes in 2012. The wheat outlook was lowered by 5.2 mt to 704.6 mt.

International wheat prices were mostly unchanged from August on rising demand and a reduced outlook for harvests in Southern Hemisphere growers, according to the FAO.

Sugar
The FAO's sugar index rose 1.8 per cent to 246 points, after unfavorable weather hampered harvesting in the center-south region of Brazil, the world's largest producer of the sweetener. Rising demand in India due to festive seasons provided short- term price support, the UN agency wrote.

An index of meat prices advanced 0.9 per cent to 175.7 points, while the FAO's gauge for cooking oils and fats added 0.4 per cent to 186.3 points. The dairy price index gained 0.7 per cent last month to 240.7.

The global food-import bill will probably be stable this year at $1.094 trillion as cheaper sugar and cooking oil make up for rising prices of dairy, fish and meat, the FAO predicted in June.