World food prices lingered near record levels in May as meat and dairy costs rose, contributing to inflationary pressures that may drive millions into hunger, even as grain prices fell.
An index of 55 food commodities slid to 232.4 points from 234.8 points in April, the United Nations’ Food and Agriculture Organization said in a report on its website today. The gauge climbed to an all-time high of 237.7 in February.
The FAO meat index climbed to an all-time high, led by record beef and sheep prices and higher poultry and pigmeat costs. Prices for staple foods including corn will more than double in two decades unless action is taken, Oxfam International said last week. World grain stocks will fall for a second year by the end of June 2012, the International Grains Council said May 26.
“The high-price situation is not something that’s just going to vanish over one season,” Abdolreza Abbassian, a senior economist at the Rome-based FAO, said in an interview before the report was released. “The fundamentals are still what they are, a very tight situation for almost all commodities.”
Agricultural-commodity price swings will persist in coming years because of a mismatch between supply and demand, with food prices expected to remain “high and volatile,” Hafez Ghanem, assistant director-general at the FAO, said last month.
The “dangerous levels” of food prices had pushed about 44 million people into poverty since June, World Bank President Robert Zoellick said in February. Another 10 million may join them should the UN food index rise another 10 percent, the World Bank said April 16. The number of hungry people in the world declined last year to 925 million from more than 1 billion in 2009, according to the FAO.
As prices stay high, “even countries that haven’t experienced high inflation on the food side remain vulnerable,” Abbassian said. “In general terms, the threat of higher inflation might have subsided, but many countries still have to catch up.”
The European Central Bank raised interest rates on April 7, joining nations from China to Sweden that increased borrowing costs this year in a bid to control inflation partly blamed on food costs. Egypt, where rising food prices helped spark protests that led to February’s ouster of President Hosni Mubarak, yesterday forecast “elevated” inflation.
While milk futures rose 0.8 percent in Chicago. Wheat prices fell 2.4 percent in Chicago and corn slipped 1.2 percent.
Corn more than doubled in the past 12 months in Chicago on speculation that more planting in the U.S., the world’s largest grower, will fail to rebuild global stocks. Wheat surged 72 percent as flooding ruined crops in Canada and Australia and drought reduced harvests in Russia and Europe, and soybeans gained 49 percent.
© Copyright 2015 Bloomberg News. All rights reserved.