The sliding dollar and increased oil prices kept global food prices steady in April after a decline in March following eight months of successive increases, the United Nations Food and Agriculture Organisation (FAO) said on Thursday.
While the FAO food price index averaged 232 points in April, little changed from March, it was still 36 per cent above the reading for April, 2010, and only 2 per cent below its peak in February, 2011, a FAO statement said.
A fall in sugar prices and a decline in rice rates helped stabilise the index, but international prices of nearly all other food commodities remained firm, the FAO said.
“A sliding dollar and increased oil prices are contributing to high food commodity prices, particularly grains,” said David Hallam, the Director of the FAO’s Trade and Market Division.
“With demand continuing strong, prospects for a return to more normal prices hinge largely on how much production will increase in 2011 and how much grain reserves are replenished in the new season,” Mr. Hallam added.
There was little change in the index because although international grain prices increased sharply in April, the rise was more than offset by declines in dairy, sugar, and rice, while oil and meat prices were mostly unchanged.
The FAO Cereal Price Index averaged 265 points, up 5.5 per cent from March and 71 per cent from April, 2010. Maize prices rose 11 per cent and wheat increased 4 per cent in April, 2011, as a result of unfavourable weather and planting delays. But large export supplies put downward pressure on rice prices.
The latest indications point to a recovery in world cereal production in 2011 in response to high prices, providing more normal weather conditions prevail. World wheat production is expected to increase by 3.5 per cent and rice by 3 per cent.
But world cereal stocks for the crop seasons ending in 2011 are forecast to decline to their lowest level since 2008, mostly due to depleting coarse grain inventories.
“Although the early outlook for cereal production in 2011 is good, weather in the coming months will be critical,” said FAO grain analyst Abdolreza Abbassian.
“Among all the cereals, maize is the most worrisome,” Mr. Abbassian added.