World food price fall seen pausing in November

Reuters News
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Posted: Dec 07, 2011 7:14 PM
World food price fall seen pausing in November

By Svetlana Kovalyova

MILAN (Reuters) - A four-month fall in world food prices from record highs is expected to slow in November, with little change from the previous month, in data due on Thursday from the United Nations' food agency.

Worries the euro zone debt crisis would undercut demand have weighed on the markets but concerns about bad crop weather supported grains.

The U.N. Food and Agriculture Organisation (FAO) will update its monthly Food Price Index on Thursday, just as the European Central Bank meets and is widely expected to cut interest rates again to help support the euro zone economy and resolve the region's sovereign debt crisis.

The FAO index - which measures price changes for a basket of cereals, oilseeds, dairy products, meat and sugar - hit a record high of nearly 238 points in February, when high food prices helped stoke the unrest of the Arab Spring and grabbed attention of the world leaders.

The FAO said last month agricultural commodity prices were set to remain high and volatile and subject to swings in unstable financial and equity markets.

Global food prices have fallen back in the last few months but remained close to levels of the 2008 food crisis which sparked riots in some poor countries and panic buying in the richer world. Corn, wheat and soybean futures at the Chicago Board of Trade all posted monthly losses last month dragged down to multi-month lows by investor concerns the euro zone debt crisis would put brakes on the global economic growth and sap commodity demand. Benchmark ICE March raw sugar futures also fell in November.

But grain prices on the physical markets largely rose last month, with the average monthly price of benchmark U.S. maize up to $278.02 a tonne in November from $274.79 a tonne in October and Thai rice rising to $648.75 a tonne from $620.25 a tonne, the FAO's database showed.

U.S. Hard Red Winter wheat was little changed at $301.75 a tonne in November, while U.S. soybeans fell to $451.00 a tonne in November from $467.42 a tonne in October, according to the database.

(Editing by William Hardy)