World food prices stable; low stocks pose risk

Monday 20 May 2013

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World food prices stable; low stocks pose risk

Rome, February 7, 2013

World food prices stabilised in January after falling in the previous three months, the United Nations food agency said on Thursday, but it warned that bad crop weather could cause violent price spikes due to tight grains stocks.

Global food prices surged in mid-2012 following the worst US drought in more than half a century and dry weather in other key exporters, raising fears of a food crisis similar to the one in 2008.

But prices eased in the last three months of 2012 due to expectations that large South American production will replenish tight global supplies.

The Food and Agriculture Organisation (FAO) said on Thursday that its food price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 210 points in January, unchanged from December.

The Rome-based agency raised its view of world cereal output in 2012 to 2.302 billion tonnes, up 20 million tonnes from its previous forecast.

Its outlook for world cereal stocks by end of season in 2013 remained unchanged at 495 million tonnes, down 3 percent from their opening level.

"We should be expecting excellent crops in 2013," said FAO senior economist Abdolreza Abbassian. "But the weather could turn negative, and because we are in a tight situation, prices could react violently and rise," he said.

In January, a rebound in oils and fats prices offset declines in cereals and sugar, the agency said in a statement.

The FAO's index is below a peak of 238 points hit in February 2011, when high food prices helped drive the Arab Spring uprisings in the Middle East and North Africa.

In the summer of 2012 it began surging to levels close to those seen in 2008, when riots, some deadly, broke out in several poor countries. - Reuters