World food prices drop sharply in May 2012 on strong US dollar – FAO

Global food prices have dropped sharply in May 2012 due to generally favourable supplies, growing global economic uncertainties and a strengthening of the US dollar, the UN Food and Agriculture Organization (FAO) said today June 7, 2012.

The UN agency’s Food Price Index which measures the monthly change in international prices of a basket of food commodities fell by 4% in May.

The May Index averaged 204 points and was 9 points down from April 2012, according to the FAO stating that “this was the lowest level since September 2011 and about 14% below its peak in February 2011.”

Grain analyst at the FAO Abdolreza Abbassian said even thought crop prices have come down sharply from their peak level, “they remain still high and vulnerable” due to risks related to weather conditions in the critical growing months ahead.

The agency raised its forecast for world cereal production by 48.5 million tonnes mainly on the expectation of a bumper maize crop in the United States. The FAO’s latest forecast for world cereal production in 2012 stands at a record level of 2,419 million tonnes, 3.2% up from the 2011 record.

By Ekow Quandzie