Milan: World food prices dipped month-on-month in November, with a fall in sugar off setting a recovery of vegetable oils, the United Nations’ food agency said on Thursday, ahead of an expected European Central Bank (ECB) interest rate decision.

A 50 kilo sack of white crystal sugar. Photo: Bloomberg

The November index was 10% below its peak in February 2011 but remained 1% above its level in November 2010, the FAO said in a statement.

The prices of cereals, one of the main commodity groups included in the Food Price Index, fell 1% from October to 228 points, largely driven by a 3% fall in wheat prices, while coarse grain prices remained virtually unchanged, it said.

“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," the FAO said.

The Rome-based agency put world cereals stocks at the end of the 2012 season at 511 million tonnes, up five million tonnes from the previous forecast and 10 million tonnes higher than the previous year.

Other factors driving the prices down included deteriorating world economic prospects and a strong US dollar, the FAO added.

The FAO has cut its 2011 world cereals output to 2.323 billion tonnes from a previous forecast of 2.325 billion tonnes, but confirmed it was still a record and a 3.5% increase on 2010 output.