DUSHANBE, May 6, 2011, Asia-Plus -- According to FAO, global food prices hold steady, but cereals remain tight.

The FAO media center reported on May 5 that food prices remained virtually steady in April after falling in March following eight months of successive increases.

However, while the FAO Food Price Index averaged 232 points in April, little changed from March, it was still 36 percent above April 2010 and only two percent below its peak in February 2011.

FAO specialists consider that a fall in sugar prices and a decline in rice helped stabilize the index, but international prices of nearly all other food commodities remained firm.

“A sliding dollar and increased oil prices are contributing to high food commodity prices, particularly grains,” said David Hallam Director of FAO''s Trade and Market Division.  “With demand continuing strong, prospects for a return to more normal prices hinge largely on how much production will increase in 2011 and how much grain reserves are replenished in the new season.”

The FAO Cereal Price Index averaged 265 points, up 5.5 percent from March and 71 percent from April 2010. Maize prices rose 11 percent and wheat increased four percent in April 2011 as a result of unfavorable weather and planting delays. But large export supplies kept rice prices under downward pressure.

The FAO Oils/Fats Price Index, which had fallen by  seven percent in March, was nearly unchanged in April.  The FAO Sugar Price Index averaged nearly 348 points, down seven percent from March and 17 percent below its January record.  The FAO Dairy Price Index averaged 229 points, down 2.4 percent from March. A good start of the northern hemisphere season has kept prices from rising after seven months of steady growth.  The FAO Meat Price Index, although at a record level, remained stable as compared to a revised estimate of 172 points in March.

In the meantime, latest indications point to a recovery in world cereal production in 2011 in response to high prices providing more normal weather conditions prevail.  World wheat production is expected to increase by 3.5 percent and rice by three percent.

But world cereal stocks for the crop seasons ending in 2011 are forecast to decline to their lowest level since 2008, mostly due to depleting coarse grain inventories.  Global wheat inventories are forecast to decrease too, but the wheat stock-to-use ratio will remain relatively comfortable, while rice inventories are even expected to rise.