World Food Prices Easing

ROME - Jul 5/12 - SNS -- World food prices continued to ease in June, with the FAO Food Price Index dropping for the third month in a row.

In June, it fell 1.8% from May to its lowest level since September 2010. The four-point drop in June brought the index to 201 points from a revised level of 205 points in May 2012.

The index now stands at 15.4% below its peak in February 2011. The average prices of all commodity groups in the Index were below May levels, with the largest drop registered for oils and fats.

Economic Uncertainty Lowered Prices

Continued economic uncertainties and generally adequate food supply prospects kept the index down although growing concerns over dry weather sent prices of some crops higher toward the end of the month.

Food commodity prices have started rising again recently, mostly because of adverse weather and this may result in a higher Food Price Index in July.

FAO also lowered its forecast for 2012 world cereal production by more than 23 million metric tons (MT) from May, which is likely to result in a smaller build-up of global stocks by the end of seasons in 2013.

FAO's new forecast for world cereal production in 2012 stands at 2 396 million MT, still a record level and 2% up from the previous high registered last year.

Adequate Supply

According to FAO's latest assessment, the overall supply and demand situation in 2012-13 remains adequate thanks to abundant supplies of rice, a leading food staple, and sufficient exportable supplies of wheat and coarse grains.

But grain prices were very volatile in June due to continuing dryness and above-average temperatures in most of the major maize growing regions of the United States. Adverse weather is diminishing prospects of an improvement in the maize supply situation and FAO is monitoring the development closely.