The United Nations said a jump in food prices had run out of
steam, even as it ditched expectations of a rise in world grains production,
and inventories, citing droughts in Russia and the US.
The UN's food agency, the Food and Agriculture Organization,
said that food prices, which "spiked" 6% in July, remained unchanged last
month, as a rise in dairy and meat prices was cancelled out by an 8.5% tumble
in sugar values.
The "sharp" fall in sugar prices reflected "improved
production outlook amid more favourable weather conditions in Brazil, the
world's largest sugar exporter, which was supportive to sugarcane harvesting,
and recovering monsoon rains in India", the FAO said.
Cereals prices ended little changed, "following heavy rains
in areas hardest hit by drought in the US and the announcement that the Russian
Federation would not impose export restrictions" on grains.
Jose Graziano da Silva, who on Tuesday warned of the risk of
a food "catastrophe", said that the price stability was "reassuring", adding
that current values "do not justify talk of a world food crisis".
'Negative effects of
Nonetheless, the organisation scrapped estimates of world
grains production rising in 2012-13, cutting its harvest forecast by 100m
tonnes to 2.295bn tonnes.
Inventories will end the season at 503.1m tonnes, a crop of
18.8m tonnes, rather than showing the increase that had been factored in.
|FAO world cereal estimates, 2012-13, change on last and (year on year)|
Production: 2.295bn tonnes, -101m tonnes, (-2.2%)
Utilisation: 2.317bn tonnes, -53m tonnes, -0.3%
Trade: 290.3m tonnes, -6.4m tonnes, (-3.9%)
Carryout stocks: 503.1m tonnes, -32.5m tonnes, (-3.6%)
The downgrades reflected in part a downgrade to 40m tonnes
in the estimate for Russia's wheat crop, blamed on "the negative effects of
drought", and ideas that the Kazakh harvest is set to near-halve.
However, the biggest cuts were to hopes for the coarse
grains harvest, following the "widespread and severe" US drought, which has
left the country facing a 40m-tonne decline in corn output.
The world harvest of coarse grains, including corn, will drop
by 17.4m tonnes, the FAO said, wiping more than 80m tonnes from its previous
Expectations to consumption too were lowered, with a hit to consumption
from high grain prices, "seen as curbing demand, especially for production of
fuel ethanol from corn".
Nonetheless, the estimate for world coarse grain stocks at the
close of 2012-13 was cut to 164.4m tonnes – the lowest for six years.
The ratio of stocks to disappearance in major exporting
countries, a much-watched pricing metric, was estimated at 9.2%, indicating the
tightest stocks in at least a decade.
The UN cut its estimate for rice output and inventories too,
although stocks, at 165.0m tonnes, still look comfortable, representing an
eighth successive season of increase.
The harvest downgrade "stems from a deterioration in crop
prospects in a number of Asian countries, mostly as a result of unfavourable
climatic conditions," the FAO said.