According to the UN Food and Agricultural Organisation (FAO) global food prices fell to their lowest level for five months in November. Despite concern earlier in the year that drought in the US and other key agricultural areas would lead to a food price spiral similar to 2010, global food prices in November are 3% below year earlier levels and now 16% below the late 2010 peak.
Over the past twelve months a 10% gain in cereal prices has been countered by year on year falls in all other major food categories. The sharpest declines occurred in oils and sugar.
Palm oil prices have declined on high production resulting in rising inventories in Indonesia and Malaysia. Sugar prices meanwhile have fallen on the back of healthy crops in Brazil, Thailand and China.
US futures prices point to a mixed picture in 2013 with declines of 10%-15% in corn/soybeans but gains of around 7% in meat prices.
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