Food, below; soya stand

Food prices fell during April. The decline is a consequence of the negative growth of some indices. According to the latest report of the United Nations Food and Agriculture Organization (FAO), during April 2012, the price of food decreased, so that the indicator was 214 points, 1.4% less than it was registered in March. . Likewise, the index was 8.9% below the level shown in April 2011.

The decrease is a consequence of the negative growth of individual component indices, which was partially neutralized by the movement of the oil and fat index, and to a lesser extent the meat index.

In particular, the cereal index fell almost 2.0% due to a favorable outlook for corn production for this year, as well as lower prices for wheat and, slightly, rice. The index of dairy products recorded the biggest decline in the index, due to the reconstruction of stocks in Oceania and South America.

In contrast, the oil and fat index showed an increase of 2.2% compared to April, a situation related to the development of soybean prices.

In this regard, the stated price records levels similar to those recorded during the financial crisis of 2008 and represents a pronounced upward trend since the beginning of the year, which is a consequence of the negative perspectives of the supply of cereals from the United States, Argentina and Brazil, which estimate a significant decrease in the volume of production for the current cycle.

This is the result of the impact due to high temperature conditions, lack of rain in the production regions of the above countries and competition for areas with other cereals.

According to information from the US Department of Agriculture (USDA), the negative supply outlook for this year will put pressure on ending inventories, bringing them to the lowest level in the last three business cycles.

In addition, growing demand for soybeans from China, which is estimated to be importing the largest amount in 10 years, supported the escalation of the international benchmark price.

However, during recent sessions, pressures on the United States soybean futures price began to ease due to the first reports on United States grain planting intentions for the next commercial cycle, which are estimated to increase on the favorable condition of benchmark prices observed during in 2012.

Source: El Economista / José Renato Navarrete Pérez.- Expert of the Sub-Administration for Economic Research. The opinion is the author’s and does not necessarily coincide with the official position of FIRA. (email protected)

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