The UN Food and Agriculture Association has revealed that global food prices fell in December due to record crops and falls in the cost of cereals, sugar and oils.  The FAO said its Food Price Index dropped 2.4 percent between November and December 2011.

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However, although prices dropped steadily in the second half of the year, overall average food prices for 2011 were the highest since the FAO started measuring them in 1990. The previous high was in 2008.

Commenting on the new figures, FAO Senior Grains Economist Abdolreza Abbassian said that it was difficult to make any firm prediction on price trends for the coming months. Abbassian said,
 “Given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead.”

Cereal prices fall furthest

Among the principal commodities, cereal prices registered the biggest fall; prices dropped 4.8 percent in December on record crops and an improved supply outlook. Maize prices fell 6 percent, wheat 4 percent and rice 3 percent. However, overall the cereal price index for 2011 was 35 percent higher than for 2010 and the highest overall level since the 1970s.

Oils and Fats prices were 3 percent lower last month than in November due to larger than expected overall supplies of vegetable oil (notably palm and sunflower oil), and lower than  expected demand for soybeans.

Although poultry and bovine meat prices rose slightly, a 2.2 per cent decline in pig meat prices and a small reduction in ovine (sheep) meat prices saw the index fall overall. Nevertheless, annual figures for 2011 show meat prices averaged 16 percent higher than in 2010. Dairy prices rose last month; dairy products were an average of 10 per cent higher in 2011 than the previous year.

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