World food prices eased in April after rising in the first quarter of this year, the United Nation's food agency said, but inflation worries are still simmering as soybean prices climb.
Record high food prices last February helped to fuel the Arab Spring uprisings in the Middle East and North Africa. Prices receded in the second half of 2011 but the uptrend resumed in January.
The FAO Food Price Index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 214 points in April, down from revised 217 in March, the UN's Food and Agriculture Organisation (FAO) said on Thursday.
Yet soybean prices - at their highest since July 2008 - are likely to rise further due to tight supplies, driving corn prices higher, the agency's senior economist said.
The index drop reflected a 2.5 percent month-on-month fall in maize prices, a 1 percent fall in wheat and a 5 percent drop in sugar prices, which offset a 2.2 percent rise in vegetable oils fuelled by soaring soybean prices.
"You would see prices most likely remaining under downward pressure in the next couple of months," the FAO's senior economist and grain analyst Abdolreza Abbassian told Reuters, adding that weather remained a critical factor.
The index seems to have stabilized at a relatively high level of around 214 points, the FAO said in a monthly update.
Last week, the World Bank said costlier oil, strong demand from Asia and bad weather had been pushing up global food prices, adding that if current production forecasts for 2012/2013 do not materialize, prices could reach higher levels.
U.S. soybean futures, one of the major drivers on international grain markets in the past few months, have been fuelled by continuous purchases from China, the world's largest buyer.
"For the (FAO) index, the conditions associated with oilseeds especially have been supportive," Rabobank senior commodity analyst Keith Flury said.
BIGGER CROPS, TIGHT MARKET
While record total cereal crops are expected this year, strong demand coupled with low initial stocks are likely to lead to tight supplies of coarse grains and soybeans which would support prices, the FAO said in its Food Outlook.
The FAO has cut its outlook for the world new crop wheat output to 675 million metric tonnes (744 million tons) from an earlier forecast of 690 million, down 3.6 percent from last year, citing output falls in Ukraine, Kazakhstan, China, Morocco and the European Union.