By The Global Journal | June 7, 2012 - 12:00 GMT
Global food prices dropped sharply in May as a result of abundant supply, global economic uncertainties, and strengthening of the US dollar, according to the Food and Agricultural Organization of the United Nations (FAO).
The FAO Food Price Index, which measures monthly fluctuations in prices of a basket of food commodities, fell 4% from April and 14% from February when prices peaked. Prices have not sunk this low since September of last year.
However, while the production of cereal is predicted to increase by 48.5 million tons since May due to an abundance of corn harvest in the US, this will largely depend on the weather conditions.
"Crop prices have come down sharply from their peak level but they remain still high and vulnerable due to risks related to weather conditions in the critical growing months ahead," said FAO's grain analyst Abdolreza Abbassian.
Overall, the predicted level of cereal production is expected to rise to a record of 2,419 tons. Cereal utilization, on the other hand, is forecast to reach 2,376 tons. At these rates, supply is likely to exceed demand, thus replenishing cereal stocks.
Food prices and supply are bound to be an important topic in the upcoming Rio+20 Conference where issues such as poverty and sustainable development will be discussed.
(Photo © FAO)
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