UN: Overall cost of food remained steady in April

Despite a sharp increase in international grain prices, the overall cost of food remained steady in April after falling in March, the United Nations Food and Agriculture Organization (FAO) reported today.

The FAO Food Price Index averaged 232 points in April, virtually unchanged from March, when it fell following eight months of successive increases. However, it was still 36 per cent higher than it was in April 2010, the Rome-based agency noted in a news release.

A fall in sugar prices and a decline in rice helped stabilize the index, but international prices of nearly all other food commodities remained firm.

“A sliding dollar and increased oil prices are contributing to high food commodity prices, particularly grains,” said David Hallam, Director of 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,” he added.

The FAO Cereal Price Index averaged 265 points, up 5.5 per cent from March and 71 per cent from last April. Maize prices rose 11 per cent and wheat increased four per cent in last month as a result of unfavourable weather and planting delays.

The increase in grain prices in April was “more than offset” by declines in dairy, sugar, and rice, while oils and meat prices were mostly unchanged, according to FAO.

The agency said the latest indications point to a recovery in world cereal production in 2011, provided that more normal weather conditions prevail. Wheat production is expected to increase by 3.5 per cent and rice by three per cent.

“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.

“Production prospects for 2010 were extremely favourable at this time last year but unfavourable weather conditions between July and October changed that outlook drastically,” he stated, adding that maize is the “most worrisome” among the cereals.