High volatility and price swings in food commodities are likely to prevail for the rest of this year and could continue into 2012, UN body Food and Agriculture Organisation on Tuesday said.
“High and volatile agricultural commodity prices are likely to prevail for the rest of this year and into 2012,” Food and Agriculture Organisation said in a statement.
The next few months will be critical in determining how the major crops will fare in 2011, FAO’s bi—annual report Food Outlook said.
Although there is encouraging news from Russian Federation and Ukraine regarding wheat crop but weather conditions in Europe and North America could hamper maize and wheat yields.
“The general situation for agricultural crops and food commodities is tight with world prices at stubbornly high levels, posing a threat to many low—income food deficit countries,” FAO Markets and Trade Division Director David Hallam said.
However, it pointed out that the record cereal production in 2011 is expected to meet consumption, providing little support to prices.
“The Russian Federation’s announcement that it will remove its cereals export ban from July, 2011 could help relieve some of that pressure,” FAO Grain Analyst Abdolreza Abbassian said.
The global food import bill is expected to reach a new record of $ 1.29 trillion in 2011, FAO said.
“Low-income food deficit countries and least developed countries would be hardest-hit since they would likely have to spend respectively 27 and 30 per cent more on food imports than last year,” it said.
Expenditure on imported foodstuff for vulnerable nations could account for roughly 18 per cent of their total import bills compared to a world average of around seven per cent, FAO added.
Despite the bleak international outlook, global prices marginally softened last month.
Global food prices in May registered a modest drop on the back of a marginal decline in cereals and sugar prices that offset high meat and dairy product rates, the international body on farm sector said.
“The FAO Food Price Index averaged 232 points in May from a revised estimate of 235 points in April but was still 37 per cent above May, 2010,” it said.