Strong demand to fuel world food prices
ROME - Strong demand looks set to support world food prices in 2018 although the political situation in oil-producing countries and international trade negotiations may herald more volatility, a United Nations food agency economist has said.
World food prices rose 8.2% in 2017 from the previous year, reaching their highest annual value since 2014, on an index compiled by the Food and Agriculture Organisation (FAO).
Food on international markets is still 24% cheaper than its 2011 high, and supplies of many commodities in the index of cereals, oilseeds, dairy products, meat and sugar, remain ample.
"The general sentiment is that we know what supplies are, and there is no excuse to think demand would get weak ... so there is momentum being built," said FAO senior economist Abdolreza Abbassian.
The index rose annually despite a 3.3% fall in December from the month before, as dairy, vegetable oils and sugar values declined sharply.
Improved global growth prospects have helped fuel demand in most countries but it was too early in the year to predict what effect weather conditions would have on harvests, meaning supply could still exceed expectations, Abbassian said.
Oil prices were also driving developments, he said.
"If oil prices are the highest in a couple of years, all you need is some sort of unexpected development in one of the big oil producing countries to see a spike in oil and that would definitely spill over to other commodities," Abbassian said.
Oil hovered below a three-year high near US$70 a barrel yesterday on signs that production cuts by OPEC and Russia are tightening supplies. International benchmark Brent crude futures were trading 18 US cents lower at US$69.69 by 1004 GMT, having risen above US$70 earlier in the session.
Abbassian said last year's market uncertainty about issues such as a planned renegotiation of the North American Free Trade Agreement had also not yet been assuaged.
"I think in 2018 we are going to confront the real consequences of some of these developments," he said. "It's going to be a little more uncertain, a little more volatile and unpredictable." – Nampa/Reuters
World food prices rose 8.2% in 2017 from the previous year, reaching their highest annual value since 2014, on an index compiled by the Food and Agriculture Organisation (FAO).
Food on international markets is still 24% cheaper than its 2011 high, and supplies of many commodities in the index of cereals, oilseeds, dairy products, meat and sugar, remain ample.
"The general sentiment is that we know what supplies are, and there is no excuse to think demand would get weak ... so there is momentum being built," said FAO senior economist Abdolreza Abbassian.
The index rose annually despite a 3.3% fall in December from the month before, as dairy, vegetable oils and sugar values declined sharply.
Improved global growth prospects have helped fuel demand in most countries but it was too early in the year to predict what effect weather conditions would have on harvests, meaning supply could still exceed expectations, Abbassian said.
Oil prices were also driving developments, he said.
"If oil prices are the highest in a couple of years, all you need is some sort of unexpected development in one of the big oil producing countries to see a spike in oil and that would definitely spill over to other commodities," Abbassian said.
Oil hovered below a three-year high near US$70 a barrel yesterday on signs that production cuts by OPEC and Russia are tightening supplies. International benchmark Brent crude futures were trading 18 US cents lower at US$69.69 by 1004 GMT, having risen above US$70 earlier in the session.
Abbassian said last year's market uncertainty about issues such as a planned renegotiation of the North American Free Trade Agreement had also not yet been assuaged.
"I think in 2018 we are going to confront the real consequences of some of these developments," he said. "It's going to be a little more uncertain, a little more volatile and unpredictable." – Nampa/Reuters
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