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After slipping for three consecutive months, world food prices kept steady this January, as prices for oil and fats balanced out the lower prices of cereal and sugar, said the United Nations Food and Agriculture Organisation.
FAO’s Food Price Index, which measures monthly changes in international prices of a basket of meat, dairy, cereals, oils and fats, and sugar, maintained at 210 points in December and January. The plateau coincides with a revised 2012 forecast for world cereal production estimated at 2,302 million tonnes, up 20 million tonnes from December’s forecast, but 2% down from the 2011 record crop. In the report released by the agency, ‘Cereals Supply and Demand Brief, the revision is linked to adjustments in maize production estimates in China, North America and the European Commonwealth of Independent States.
Early prospects for 2013 cereal production expect increased world wheat output, largely from a 4% to 5% bump in wheat production within the European Union, where the weather has been favourable so far.
Meanwhile, in the United States, wheat production in the southern Plains is expected to wither due to severe drought conditions.
“Given the tight supply situation, weather remains an important determinant of prices. For several cereals, production needs to increase significantly this year in order to avoid unexpected price surges,” said FAO senior grains economist Abdolreza Abbassian.
The FAO Cereal Price Index dropped 1.1%, or nearly three points, to 247 points in January. The Cereal Index has been on the decline since October, reflecting improved crop conditions.
Prices for oils and fats rose 4.4%, or 9 points, from December, reversing declines in the last four months to an average of 205 in January. The rebound was mainly driven by palm oil on account of fresh import demand.
Dairy prices averaged slightly higher than in December to 198. Meat prices averaged 176, slightly weaker due to lower poultry and pig meat prices.