UN: World food prices to remain high into 2012

June 7th, 2011 - 9:22 pm ICT by BNO News  

UNITED NATIONS (BNO NEWS) — World food prices are likely to remain high for the rest of this year and into 2012, according to a recently released report by the United Nations (UN).

The UN Food and Agriculture Organization (FAO) released its biannual Food Outlook, which states that the next few months will be critical in determining how the major crops will fare this year.

“The general situation for agricultural crops and food commodities is tight with world prices at stubbornly high levels, posing a threat to many low-income food deficit countries,” according to David Hallam, Director of FAO’s Markets and Trade Division.

Global food prices, which earlier this year soared to levels seen during the 2007-08 food crisis, dropped by one percent in May, according to FAO’s monthly food price index, which showed that declines in the prices of cereals and sugar were responsible for the slight decrease in the May index, as this offset increases in meat and dairy prices.

The agency said current prospects for cereals during the current year point to a record harvest of 2,315 million tons – a 3.5 percent increase over 2010, which marked a one percent drop over 2009.

In addition, global wheat output is expected to be 3.2 percent up from last year’s reduced crop, mostly reflecting improved yields in Russia. World cereals stocks at the close of the crop seasons in 2012 are put at 494 million tons, up only two percent from sharply reduced opening levels.

However, FAO noted that demand for cereals has also been increasing so that the year’s crop, even at record levels, is expected to barely meet consumption, providing support to prices.

In the oil seeds market, supplies in 2011-12 may not be sufficient to meet growing oil and meal demand, the FAO said, which could result in further reductions in global inventories.

Meanwhile, the global supply and demand balance for sugar points to some improvements, supported by large anticipated production in 2010-11, which is likely to surpass consumption for the first time since 2007-08.

Global meat production, with high feed prices, disease outbreaks and depleted animal inventories, the agency said, were forecast to limit the expansion of production to 294 million tons in 2011 - only one percent more than 2010.

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