December 2, 2008

                       
Agriculture commodities prices falling amid economy slowdown
                               

Prices of agriculture commodities have plummeted faster by more than 50 percent from their recent peaks as farmers grapple with the financial crisis and uncertainty, according to the UN Food Agriculture Organization.
 
FAO's Food Outlook in November said from a supply perspective, the global response to the high prices recently witnessed was mixed. This was seen in this year's cereal production recovery, nearly all of which was concentrated in the developed countries, with a weaker response in the developing countries. As gloomy prospects for agricultural prices, high input costs, and more difficult access to credit loom, farmers may cut their plantings.
 
FAO stressed that lower prices cannot be sustained unless they reflect consolidated cost efficiency gains. It pointed out that low prices would only prevent much-needed investment in the agricultural sector. With banks less likely to lend, countries' agricultural productivity is undercut.
 
The sharp fall in cereal and meal prices are likely to translate in falling feed costs for livestock producers, particularly favouring the intensive poultry and pork production systems. Meanwhile, prospects for a general economic slowdown may have strong dampening effects on consumer meat demand and favour a shift of consumers towards poultry, which remains the cheapest source of meat protein.
           
Meat prices fall, downturn in September expected to continue
       
Global meat prices are going for a downturn amid increased animal slaughtering and a falling demand, particularly in developed countries. The FAO International Price Index of Meat Products rise has stopped in its tracks in September.
 
The September fall in prices is expected to continue over the coming months.
 
World meat prices have generally followed an upward spiral between January and August 2008, as rising feed costs and firm consumer demand pushed the product prices upwards. The rise was particularly marked in the case of poultry meat and, to a smaller extent in beef and pork. Based on their indices, poultry meat prices increased most by 21 percent since January, followed by beef and pork. 
 

Price prospects in the coming months will dip. In the short term, the economic slowdown and cheaper feedstuffs could well result in an accelerating fall in meat prices.