Improved supplies have kept world food prices under check through March, the Food and Agriculture Organisation (FAO) has said.

In its latest Food Price Index, the organisation said that except for oils/fats, world food prices in March remained virtually unchanged from their February levels. The Index averaged 216 points in March, compared to 215 in February.

The oils/fats price index rose in March to 245 points, about 2.5 percent higher than February, as markets reacted to the prospect of growing tightness in the 2011-12.

“Weak growth in world palm oil production and limited global soy oil export availabilities combined with declining rapeseed production contributed to the rise in oils prices,'' says the organisation. Improved sugar output in India, EU and Thailand helped contain sugar prices below their high levels in the corresponding month last year, the report released on Thursday said.

The cereal price index averaged 227 points in March as against 226 in the previous month. Maize prices registered some gain, supported by low inventories and a strong soybean market, but wheat changed little as supplies were good. After several months of decline, price of rice, however, recovered on the back of large purchases by China and Nigeria.

The FAO's production forecast for wheat in 2012 remains at 690 million tonnes, 1.4 percent below the record in 2011 and unchanged from last month. In 2012-13 world wheat supplies would still exceed projected need because of large inventories.

Rice markets hale

Rice markets also appear to be well supplied in 2012-13 given consecutive years of record production which have helped boost inventories. However, coarse grain supplies will be tight in the coming months, especially for maize in the U.S., the world's largest producer and exporter.

Expectation of high stock

The forecast for world cereal carryover stocks in 2012 has been raised by 1 million tonnes over the previous month to 519 million tonnes. Much of the upward revision relates to expectations of higher rice inventories. At the current forecast level, the world cereal stocks-to-use ratio in 2011-12 reaches 22.1 percent, up slightly from 21.7 percent in 2010-11. Rice inventories are forecast to increase the most — by 11 million tonnes to 152 million tonnes, the highest level since 2000, points out the report.

Keywords: Food Price IndexFAO

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