The UN Food and Agriculture Organisation's Food Price Index rose one percent to 234 points in June 2011, the figure is 39 per cent higher than in June 2010, but four percent below its all-time high of 238 points in February of this year. The index measures fluctuations in the international prices of a basket of food commodities. FAO sources said a strong rise in international sugar prices was behind much of the increase.

The FAO Cereal Price index averaged 259 points in June, down one percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the Russian Federation's export ban contributed to the price drop.

However, the maize market remained tight because of low 2010 supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world's largest rice exporter.

Sugar rises on Brazil prospects

The FAO Sugar Price Index rose 14 percent from May to June, reaching 359 points, 15 percent below its January record. Production in Brazil, the world's biggest sugar producer, is forecast to fall below last year's level.

The FAO Dairy price Index averaged 232 points in June, virtually unchanged from 231 points in May. The FAO Meat Price Index averaged 180, marginally up from May with poultry meat rising three percent and climbing to a new record, while pig meat prices declined somewhat.

New cereal forecast

Following two consecutive revisions to the US crops and planting prospects for 2011, FAO's latest forecast for world cereal production in 2011/2012 stands at nearly 2 313 million tonnes, 3.3 percent higher than last year and 11 million tonnes above FAO's last forecast on 22 June.

The organisation has forecast an increase in world cereal utilisation; in 2011/2012 it is estimated to grow 1.4 per cent from 2010/2011 levels, reaching 2 307 million tonnes, just five million tonnes under forecast production.
World cereal stocks at the close of the crop season in 2012 are now expected to stand six million tonnes above their opening levels.  Analysts say that, while wheat and rice inventories are expected to become more comfortable, coarse grains stocks, especially maize, would remain tight.