World food prices unlikely to fall further

Posted by Isobel Drake on 11th August 2009

The UN food agency has advised that a fall in food prices below the levels seen before prior to 2008 are highly unlikely given market fundamentals.

Food prices soared early last year as talk of a looming food crisis dominated news headlines. Prices of many commodities then began to fall around the middle of the year as fears about the global economy led to demand reductions and a wave of selling.

Food prices still remained high based on historical levels, however, and, with the global economy recovering, the prospect for further declines appear limited.

“The world food system has adjusted even though stocks are at a 20-year low … the market refined its level to one that it can sustain,” World Food Programme (WFP) Deputy Executive Director Sheila Sisulu told Reuters. “Our view is that they won’t go back to the prices before 2008.”

Sisulu said prices for wheat, maize and rice – which were leaders in the commodity boom – had come down but had now seemed to find their level.

Food costs in developing nations were seen as a major concern as falls had not spread as quickly as hoped.

“The prices in Africa … have not gone down at the same rate as they have gone down globally,” Sisulu advised.