Global food prices dropped sharply in May, owing to favourable supplies, growing global economic uncertainties and a strengthening dollar, a report by the United Nations’ Food and Agricultural Organization (FAO) said on Thursday.
The FAO Food Price Index, which gauges monthly changes in international prices of a basket of food commodities, fell four per cent in May. It averaged 204 points in the month, nine points below the average in April. This was the lowest since September, and about 14 per cent below its peak in February 2011.
“Crop prices have come down sharply from their peak levels, but they still remain high and vulnerable due to risks related to weather conditions in the critical growing months ahead," said FAO's grain analyst Abdolreza Abbassian.
The organisation has raised the forecast for world cereal production by 48.5 million tonnes since May, primarily on expectations of a bumper maize crop in the United States. The latest forecast for global cereal production this year stands at a record 2,419 million tonnes, 3.2 per cent higher than that in 2011. The bulk of the increase is expected to be accounted for by maize from the United States.
The forecast for global coarse grain production is 1,248 million tonnes, an 85 million tonne rise over the previous year.
However, with planting yet to be completed and much of the crop in early stages of development, the outcome would depend on weather conditions in the coming months.
The forecast for global rice production in 2012 is firmer, at about 490 million tonnes, pointing to a 2.2 per cent rise over 2011 and reflecting larger plantings in Asia.
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For wheat, latest indicators point to contraction in production by about three per cent to 680 million tonnes this year, well above the average in the past five years.
Global cereal utilisation is estimated to rise at least two per cent in 2012-13 to 2 376 million tonnes, with feed utilisation rising 3.8 per cent. Food consumption is expected to rise just one per cent, largely keeping in pace with growth in world population.
At current estimates, world cereal production would exceed anticipated utilisation in 2012-13 (which was scaled up since last month by 19 million tones, or one per cent) and lead to a significant replenishment of world cereal stocks, by about 36 million tonnes, compared with the previous season.