February 7, 2014

For the first time for three months, world food prices fell in January, due to plenty of food is reaching markets and production looks good, however, demand particularly in Asia is rising, the UN's Food and Agriculture Organisation (FAO) said.

A key price index fell by 1.3% from the level in December, FAO said. Its Food Price Index averaged 203.4 points in January as cheaper cereals, sugars, oils and meat outstripped climbing dairy prices.

"We're seeing lower prices due to abundant supplies, but stronger upturn in demand, such as an increase in the pace of imports from Asia, could limit the decline," said FAO economist Abdolreza Abbassian.

Bumper grain crops helped to bring down cereal prices by 1.6% from December and 23% lower than January 2013, while meat prices, which had strengthened over the past few months, also fell in January, the FAO said.

"The only notable exception was a rise in dairy prices... reflecting strong demand, especially from China, North Africa, Middle East and the Russian Federation," said Michael Griffin, FAO's dairy and livestock market expert.

FAO also released its latest estimate for world cereal production in 2013, forecasting a stronger growth in world cereal production than anticipated -- up 8.5% from 2012 -- and said prospects for crops in 2014 were favourable.