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U.N. ag organization: Food prices should moderate

The United Nations Food and Agriculture Organization says it expects food prices to be stable or maybe a little lower in the foreseeable future.  That organization’s Food Price Index, which tracks global prices for five major food groups, fell to a six-year low in August.  The index is up slightly since then, but it’s still about 19 percent less than a year ago.

The moderation is because of high grain inventories, sharply lower oil prices and the renewed strength in the dollar.  None of those are expected to change in the short term, but weather-driven impacts on crop production could change the food price outlook.

Global grain output is forecast to be about one percent below last year partly because of the lower outlook for this year’s U.S. corn harvest, but that’s offset by heavy global grain reserves.

FAO commodity specialists say the takeaway message is for downward price momentum with lower food price volatility.