But don't expect cheaper produce immediately or the lows of the past
Jessica Lim, Straits Times 9 Jun 08;
SINGAPOREANS emptying their pockets to pay for skyrocketing food prices can expect some breathing space later this year.
Bumper harvests in wheat, rice, sugar and dairy products have caused prices across the board to dip.
The reason for the supply surge: huge increases in crop areas and animal production to combat the record-breaking highs that food prices hit earlier this year.
Wheat, for example, traded in international markets at US$7.85 (S$10.72) per bushel on Friday - down from a peak of more than US$13 per bushel in February - on the back of a projected record wheat crop of 645 million tonnes worldwide in 2008/2009.
Prices continue to go south, but it is unclear if they will hit last year's June average of US$5.36 per bushel.
Similarly, rough-rice futures on the Chicago Board of Trade have fallen about 20 per cent since touching a record US$25.07 per 100 pounds on April 24.
But there is no reason to cheer just yet.
Consumers will have to wait a few more months before they feel the trickle effects in their pockets: supermarket stock is still mainly the high-priced stuff, said importers.
Explained rice importer Goh Hock Ho: 'When prices on the market go down, we importers do not feel it until some time later.
'Now we are still paying high prices for Thai rice, we have not seen any fall.'
A Straits Times check with supermarkets unearthed only one product which has become cheaper so far.
A 1kg packet of Mitrphol Pure Refined Sugar that cost $1 in April, now costs 95 cents.
This despite sugar prices dropping by far more.
Prices have decreased 35 per cent since the beginning of the year - and sugar is now selling on international markets at about 10 US cents a pound, about half the price level of two years ago.
Local food producers spoken to have yet to adjust their prices.
Flour manufacturer Prima Food, for one, will not be reducing prices until the end of this year.
The reason: The firm bought its wheat in bulk earlier, and prices were high then.
'We do not expect our raw material costs to be lower until the fourth quarter of the year,' said a Prima Foods spokesman, who added that any cost savings would be passed on to customers immediately.
Prima Food manufactures about 400 tonnes of flour daily, and supplies wheat flour to most manufacturers and retailers here.
Mr Liow Kian Huat, chairman of the Singapore Bakery and Confectionery Trade Association, said: 'The new crop has not come in yet, so it will take a few months till prices go down. Both consumers and bakers here should understand that.'
While prices are stabilising, they are not likely to return to the lows of a decade ago, said analysts, partly because of the competition for crops for fuel production and land use for industrialisation, as well as the effects of hoarding and market speculation.
The latest rice prices, for example, are still far above the average price of around US$385 a tonne in January, and even further beyond the 2003 price of about US$200 a tonne, leaving poorer consumers struggling to afford the staple.
'Current high prices are not sustainable, but I doubt that we will see price levels fall to those of a couple of years ago, because the emerging economies like China and India have been consuming so much,' said Mr Jimmy Koh, treasury research head of United Overseas Bank.
limjess@sph.com.sg
NO SIGNS OF A RECESSION, SAYS THARMAN: HOME, PAGE H4
Going down
WHEAT
Feb: US$13 (S$17.74) per bushel
Now: US$7.85
SUGAR
Feb: 13 US cents per pound (0.45kg)
Now: 10.6 US cents
WHOLE MILK POWER
Feb: US $4,625 per metric tonne
Now: US$4,400
BUTTER
Feb: US$4,375 per metric tonne
Now: US$4,150
Note: All prices are estimates.
Food and Agriculture Organisation and the Wisconsin Center for Dairy Research and Department of Agricultural and Applied Economics
