The FAO Food Price Index, released today, has shown food prices fell for a third consecutive month in June, dipping 1.8 per cent from May. The FPI, which measures a basket of staple foodstuffs, is currently at its lowest level since September 2010.

The index now stands at 15.4 percent below its peak in February 2011. The average prices of all commodity groups in the Index were below levels measured last month, with the largest drop registered for oils and fats.

FAO analysts said continued economic uncertainties and generally adequate food supply prospects kept the index down although growing concerns over dry weather sent prices of some crops higher toward the end of the month. Disquiet caused by adverse weather in some parts has caused prices to creep up slightly over the past fortnight, which FAO said could lead to a rebound of the Food Price Index in July.

FAO has also been forced to revise its forecast for 2012 world cereal production, lowering it by more than 23 million tonnes from May, which is likely to result in a smaller build-up of global stocks by the end of seasons in 2013. Downward revisions have also been seen in Europe this week.

The new FAO forecast, which stands at 2,396 million tonnes, is a record level, standing two per cent clear of last year’s high.

Abundant supplies of rice and other staples from Asia and the Americas have bolstered world supplies. FAO said the overall supply and demand situation in 2012/13 remains adequate but concerns over erratic weather in Europe and continued dryness and higher than average temperatures in the United States’ maize growing regions are cause for concern. Analysts said “Adverse weather is diminishing prospects of an improvement in the maize supply situation and FAO is monitoring the development closely.”

FAO Director-General José Graziano da Silva commented on the month’s events, “FAO has been actively involved in studying food price volatility and identifying appropriate policy responses. Our analytical work is helping to deepen the understanding of the nature, causes and impacts of volatility and of what governments and other stakeholders can do about it.”

The FAO will discuss the issue of swinging food prices at an event on “Food Price Volatility and Price Speculation” to be held at FAO on Friday, 6 July.

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