World food prices stable apart from cereals: FAO***

ROME, May 5 (AFP): World food prices remained almost stable in April, though tension surrounded cereal prices and climate conditions in coming months will be decisive, the UN Food and Agriculture Organisation said Thursday. After a drop in March following a run of higher prices for eight months, the FAO Food Price Index "averaged 232 points in April, little changed from March, (but) it was still 36 per cent above April 2010 and only two percent below its peak in February 2011," the Rome-based body said in a report. In April, the prices of rice, sugar and dairy products declined, while those of meat and oil and fatty products were "mostly unchanged," but the price of most cereals went up, particularly wheat and maize. Overall, the FAO cereal price index was 5.5 per cent higher than in March, drawn upwards because maize prices rose 11 per cent and wheat increased by four per cent "As a result of unfavourable weather and planting delays. But large export supplies kept rice prices under downward pressure," the report 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 marketing division. "With demand continuing strong, prospects for a return to more normal prices depend largely on how much production will increase in 2011 and how much grain reserves are replenished in the new season." Any prospect of rising food prices leads to fears of renewed food riots of the kind that affected several African countries in 2008 and which have also taken place in Haiti and the Philippines. The FAO warned that "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." However, "the wheat stock-to-use radio will remain relatively comfortable, while rice inventories are even expected to rise." "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." "Among all the cereals, maize is the most worrisome," Abbassian noted. "This year we would need above-average, if not record, yields in the United States for the maize situation to improve, but maize plantings so far have been delayed considerably due to cool and wet conditions on the ground."