ROME, Italy (Reuters) — Global food prices rose in April for a third straight month as surging dairy costs continued to pressure a United Nations food price index.
However, an expected increase in grain production may offer relief later this year.
Food prices spiked last summer as the United States was hit by a severe drought and dry weather plagued other producers. Prices fell at the start of this year but have been rising again in the past three months.
The Food and Agriculture Organization’s price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 215.5 points in April, up one percent from a revised 213.2 in March.
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A sharp rise in dairy prices was the main reason for the increase, while meat prices rose marginally and other commodities fell, the FAO said.
The agency said global cereal production would increase six percent to 2.708 billion tonnes in 2013 from the previous year, led by an expected 9.3 percent rise in coarse grains production and a 5.4 percent gain in wheat.
Whether the increased production lowers prices will depend on weather and demand over the next few months, said FAO senior economist Abdolreza Abbassian.
The cereal forecast is still “very much at the mercy of Mother Nature”, he said.
“If demand accelerates in 2013, the increase in production would be offset by higher demand.”
Production of coarse grains in the U.S. is expected to drive this year’s increase, the FAO said. Corn producers intend to plant the largest area since 1936, it added.
Europe and the Black Sea region are expected to contribute to higher wheat production, and India and Indonesia are expected to drive a 10 million tonne increase in rice production.
Last year’s world cereal production was estimated to be 2.306 billion tonnes, four million tonnes lower than last month’s figure.
Global cereal stocks at the end of this year are estimated at 505 million tonnes, five million tonnes higher than previously forecast, the FAO said.
