FAO food price index up in June on sugar prices

FAO food price index up in June on sugar prices

Milan: The UN Food and Agriculture Organisation on Thursday announced a surprise rise in its global food price index, fuelled by higher sugar prices, and raised its grain output forecast to reflect the latest US data.

The index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 234 points in June, up from a revised 231 points in May and 39% higher than in June 2010, the FAO said in a statement.

Falls in the prices of wheat, corn and soybeans had been expected to drag on the index and defuse price food inflation, one of the factors which sparked unrest in Arab countries earlier in the year.

The FAO’s index hit a record high of 238 points in February fuelled by climbing grain prices and tight supplies, raising fears of a repeat of the 2007/08 global food crisis when soaring prices triggered deadly riots in some developing countries.

The FAO Sugar Price Index averaged 359 points in June, up 14% from May.

“The price strength reflects dynamic short-term demand (for sugar) against tight exportable availabilities, notably in Brazil, the world’s largest sugar producer where production is forecast to fall below last year’s level," the agency said.

The FAO Cereals Price Index, which includes prices of main food staples such as wheat, rice and corn, fell 1% from May to an average of 259 points in June, it said.

The FAO raised its forecast for world cereal output in 2011/2012 to about 2.313 billion tonnes, 11 million tonnes above its last forecast released on 22 June and 3.3% higher than last year’s output, following two consecutive revisions to the US crops and planting prospects for 2011.