World food commodity prices plunge to lowest in seven years: FAO

Years of surplus production and record grain harvests swelled global food reserves and reduced prices by 35 percent since a record in 2011.

FAO senior economist Abdolreza Abbassian said there were no harbingers of an upward price trend in the months ahead, adding that signs of a slowdown in China were being reflected in imports of agricultural commodities like soybeans.

The food price drop was also spurred by factors “including the slump in energy prices and concerns about China’s economic slowdown and its negative consequences on the global economy and financial markets”, the FAO said.

“Nevertheless, compared to the index’s historic peak in August 2014, overall prices were down by 18 percent, with pig and ovine meat the most affected, although poultry and bovine meat quotations also slid markedly over the period”, the statement said. “Quite a striking divergence from what people were expecting a few years ago”.

The collapse in food prices comes as British farmers face receiving late Government payments following the bungled transition from the old subsidy payment system to a new digital process.

There are “abundant wheat supplies, supported by larger-than-anticipated harvests in the northern hemisphere”, the agency wrote.

“The food bill will go down”, he said. “Right now indications are for the reverse”.

“A country of that population and size slowing down affects all sectors, agriculture included”, Abbassian said.

But the falling prices are unlikely to be reversed any time soon.

Virtually all major food commodities registering marked dips.

The United Nations agency is forecasting increased production of cereal, coarse grains, wheat and rice for 2015, which is likely to further push down prices. The decline is primarily conditioned with the decline in worldwide prices of palm oil, mainly as a result of lower import demand, particularly from India and China against the background of the expected growth of production volume.

The organization’s index of global foods includes prices for grain, meat, dairy, edible oils and sugar. A sugar index fell 10 percent to the lowest since 2007 as a weaker Brazilian real encouraged more outbound shipments and on expectations that India will become a net exporter of the sweetener.