The Food and Agriculture Organization (FAO) of the United Nations says its food price index declined 1.3% in January despite an increase in dairy prices. The group says this is the first time in three months the index has softened due to lower cereal, sugar, oil and meat prices. The index averaged 203.4 in January and is 4.4% lower than year-ago.
FAO economist Abdolreza Abbassian says the decline in the index is welcome relief due to abundant supplies, but warns that strong demand from Asian countries could limit the decline.
Meanwhile, FAO raised its estimate of the world cereal crop to a record 2.502 billion MT -- up 8.5% from 2012. FAO says the bumper cereal crop will help to replenishing world reserves, which they say will reach 573 MMT, a 13.5% increase from year-ago. "At this level, the stocks-to-use ratio for global cereals would top 23.5% in 2013-14, its highest value since 2002-03 and well above its historical low of 18.4% registered in 2007-08," it says.
FAO raised its 2013-14 global wheat crop forecast by 3.4 MMT to 714.2 MMT.