The United Nations today reported a sharp drop in global food prices during May owing to generally favourable supplies, growing global economic uncertainties and a strengthening of the United States dollar.
The monthly food price index of the Food and Agriculture Organization (FAO) averaged 204 points in May, down 9 points from April, the agency said in a news release. This was the lowest level since September 2011.
The index measures the monthly change in international prices of a basket of food commodities, including meat, dairy, sugar, and cereals.
“Crop prices have come down sharply from their peak level but they remain still high and vulnerable due to risks related to weather conditions in the critical growing months ahead,” said Abdolreza Abbassian, a senior grains economist with FAO, in a news release.
The agency raised the forecast for world cereal production by 48.5 million tonnes since May, with the bulk of the increase expected to come mainly from maize in the US amid an early start of the planting season and prevailing favourable growing conditions.
FAO’s latest forecast for world cereal production in 2012 stands at a record level of 2,419 million tonnes, 3.2 per cent up from the 2011 record.
“However, with planting still to be completed and much of the crop at very early stages of development, the final outcome will depend greatly on weather conditions in the coming months,” the agency stated.
Global rice production in 2012 is expected to increase by 2.2 per cent from 2011, to some 490 million tonnes, mostly reflecting larger plantings in Asia. At the same time, the latest indications point to a decrease of about 3 per cent in the production of wheat this year, to 680 million tonnes.
FAO noted that this is still well above the average of the past five years.