The FAO Food Price Index was stable in February, as falling sugar and dairy prices offset a substantial jump in vegetable oil prices from the previous month.
Averaging 150.2 points for the month, the FAO Food Price Index was virtually unchanged from a revised 150.0 points in January and down 14.5 per cent from a year ago.
FAO also issued its first forecast for the world's 2016 wheat harvest, projecting 723 million tonnes of total production, about 10 million tonnes below last year's record output.
The FAO Food Price Index is a trade-weighted index tracking international market prices for five key commodity groups: major cereals, vegetable oils, dairy, meat and sugar.
Diverging from February's generally stable trend was a sharp increase in the FAO Vegetable Oil Price Index, which rose 8.0 per cent from the previous month. That was led by a 13 per cent surge in palm oil, which gained on reports of falling inventories and a poor production outlook in the near future. Soy oil prices also firmed as a result.
But other staple commodities more than absorbed that rise. The FAO Sugar Price Index declined 6.2 per cent from January, buoyed by strong global inventories and improved crop conditions in Brazil, the world's largest producer and exporter.
The FAO Dairy Price Index fell 2.1 per cent on the month amid sluggish imports, especially by China.
Prices of the world's staple grains were broadly stable. The FAO Cereal Price Index inched down only around half a per centage point from the previous month but was 13.7 per cent lower than a year earlier. Wheat prices fell 1.5 per cent, maize prices slipped only slightly, while rice prices rose modestly.
Meanwhile, the FAO Meat Price Index rose slightly, buoyed by supply constraints for beef from Australia and the US as well as support for private storage of pig meat in the European Union. Poultry prices fell, reflecting lower feed costs.
First global 2016 wheat production forecast sees a modest drop from last year
FAO's latest Cereal Supply and Demand Brief forecasts a 1.4 per cent drop in worldwide wheat output in 2016, due mainly to dry weather leading to reduced winter plantings in the Russian Federation and Ukraine. However, China and Pakistan are expected to sustain near-record wheat harvests, and India's output is anticipated to recover.
FAO also trimmed its estimate of last year's total cereal production to 2525 million tonnes, reflecting updated wheat production estimates from India and revised output figure from the Islamic Republic of Iran.
Estimates were also lowered for last year's world output of coarse grains and rice due to developments in Asia. Combined world cereal production in 2015 is now seen at around 1.4 per cent below the record level reached in 2014.
Global cereal stocks are likely to amount to 636 million tonnes by the close of seasons ending in 2016, nearly unchanged from their already high opening levels, but down 6.2 million tonnes from the previous month's forecast.
The revision mostly reflects reduced wheat inventory forecasts for the Islamic Republic of Iran and Uzbekistan, largely resulting from adjustments to historical stock numbers of both countries.
The world cereal stock-to-use ratio, a leading indicator of global world food security, still stands at a relatively high level of 24.7 per cent.
FAO now expects world trade in cereals to decline by 2.0 per cent in volume terms in 2015/16 from the previous season. That mostly reflects shrinking demand for wheat and barley, more than offsetting firmer demand for rice.