Food prices ease marginally in November

At the new level of 215 points, the index was 23 points, or 10%, below its peak in February 2011 but remained two points, or 1%, above its level in November 2010.

The prices of cereals, one of the main commodity groups included in the food price index, dropped by three points or 1% from October.

The retreat was largely driven by wheat prices, which dropped 3%, while rice quotations fell only slightly and coarse grain prices remained virtually unchanged.

Nevertheless, the cereals index remained six points higher than in November 2010.

Contributing to the downward pressure on cereal prices is the significant upward revision of the 2011/2012 global cereal supply estimate as a result of better crop prospects in some Asian countries and the Russian Federation, and larger than anticipated stocks in the latter.

Other factors include deteriorating world economic prospects and a strong US dollar, the UN agency noted.

These are among the highlights of the latest issue of FAO's quarterly crop prospects and food situation report.

The report, published on Thursday, confirmed a record level of world cereal production of 2.323 billion tonnes for 2011. Although marginally lower than October's estimate, this represents a 3.5% increase on 2010 production.

At this level, the 2011 cereal crop should be sufficient to cover the expected increase in utilisation in 2011/12 and also allow for a moderate replenishment of world reserves, the report said.

Among cereals, global wheat output is expected to increase by 6.5%, while the forecasts for coarse grains and rice were reduced slightly due to a downward adjustment for maize in the US and a deterioration of rice prospects in Indonesia.

Total cereal utilisation in 2011/2012 is forecast at 2.310 billion tonnes, 1.8% higher than in 2010/2011.

An important feature is a sharp 8% rise in the use of wheat for animal feed given its competitive price compared to coarse grains and maize in particular.

The forecast for world cereal ending stocks by the close of seasons in 2012 has been raised by almost five million tonnes since last month, to 511 million tons, the report said.

At this level world cereal stocks would be 10 million tons higher than last year and the world cereal stocks-to-use ratio would increase slightly to 22%.