World food prices seen down in October: FAO

MILAN, Nov 3 (Reuters): World food prices measured by the United Nations' food agency are likely to show a fall in October, easing inflationary pressures ahead of the European Central Bank's expected decision on interest rates and of the Group of 20 leaders' meeting. UN Food and Agriculture Organisation (FAO) figures are expected to move further away from the record high in February, reflecting a drop in grain and other commodities prices which were hit by demand concerns amid economic gloom last month. The FAO will update its monthly Food Price Index Thursday, just as the ECB meets and is widely expected to leave interest rates unchanged while preparing for a cut in December to support the euro zone economy. The FAO index -- which measures price changes for a basket of cereals, oilseeds, dairy products, meat and sugar -- hit a record high of nearly 238 points in February, when high food prices helped stoke the unrest of the Arab Spring. Global food prices have fallen back in the last few months but remained close to levels of the 2008 food crisis which sparked riots in some poor countries and panic buying in the richer world. International organisations, including the World Bank, have warned of more food price volatility in the future. The head of the World Bank said Tuesday the food crisis was far from over, especially in poor countries, and called on the Group of 20 world leaders at a meeting on November 3 and November 4 to find ways to deal with increased global price volatility. The World Bank's quarterly food price index showed a one percent dip in September, settling at five per cent below its February peak but still 19 per cent above its September 2010 levels. The FAO said last month global food prices were likely to see dramatic swings in coming years due to economic uncertainty, low grain reserves, rising risks of weather shocks as well as closer links between energy and agricultural markets. Investor concerns about a global economic slowdown which may undercut commodities demand, helped push average daily prices of benchmark US grain futures down in October. Benchmark ICE March raw sugar futures also eased last month. On the physical markets, the average monthly price of benchmark US maize fell to $274.79 a tonne in October from $305.63 a tonne in September, while US Hard Red Winter wheat fell to $301.50 a tonne from $334.60 a tonne, the FAO's database showed.