Worries About Rising Food Prices May Ease

September 11, 2012

Demand remains high for food commodities like maize

A United Nations report says world food prices stayed the same in August. Prices were unchanged after rising sharply in July.

A summer of drought in the United States and Russia has reduced expectations for corn and wheat supplies. As a result, a measure of food prices by the U.N. Food and Agriculture Organization rose six percent in July. But FAO economist Concepcion Calpe says the expected reductions did not get any worse in August.

CONCEPCION CALPE: "We're not in a bad situation, or as bad situation as we were last month because the prospects are not worsening further. And this is already good news."

Ms. Calpe says the FAO price index remains about ten percent below its highest level, reached in February twenty-eleven. But prices are still twice as high as they were ten years ago.

Demand remains high for food commodities like maize and wheat. The U.N. estimates that more cereal crops will be consumed this year than will be produced. That means markets will have to use some of the supplies that have been kept in reserve. Concepcion Calpe says those reserves have been low for several years.

CONCEPCION CALPE: "And therefore we are very much susceptible to very quick changes because there is very little buffer on which to rely to protect ourselves should there be another bad news on the production front."