Global food price softens

Global food prices dropped 4% in May, according to the Rome-based UN Food and Agriculture Organisation’s (FAO’s) Food Price Index which fell to its the lowest level since September 2011.

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The decline is attributed to favourable supplies, growing global economic uncertainties and a strengthening US dollar. “Crop prices have come down from their peak level but remain high and vulnerable due to weather related risks in the critical growing period ahead,” said FAO grain analyst Abdolreza Abbassian.

The FAO has lifted its 2012 forecast for world grain production by 48,5 million tons, to a record 2 419 million tons, mainly on the expectation of a bumper maize crop in the US. However, with planting still to be completed and much of the crop at an early stage, the outcome will depend greatly on weather in the coming months.

The forecast for global rice production in 2012 is 2,2% firmer than in 2011 at 490 million tons, reflecting larger plantings in Asia. Latest indications for wheat point to a contraction of about 3% in 2012 to 680 million tons. This remains higher than the five-year average. 

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