Global food prices are not expected to fall much further after dipping to their lowest level in three years in September, the United Nations food agency said on Thursday, trimming its estimate for 2013/14 world cereals production.
The decline in prices last month was driven by a sharp fall in the cost of grains, while dairy, meat and sugar prices all rose, the Food and Agriculture Organization (FAO) said.
Food prices surged during the summer of 2012 due to a major drought in the United States but prospects for a rebound in cereal supplies to record levels have reversed the price trend this year.
The FAO's index measuring monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 199.1 points in September, down about 1 percent from 201.4 points in August.
The index has fallen for five consecutive months and has reached its lowest level since September 2010.
"There is still some room for prices to go down but not significantly," said FAO senior economist Abdolreza Abbassian. "Anything that happens now on the negative side could push up prices again," he said.
FAO is due to hold a second ministerial meeting to discuss food price volatility at its Rome headquarters on October 7, with 40 ministers expected to attend.
Its first meeting last year was organized to tackle the third spike in grain prices in four years. Even though prices have fallen from their peaks, FAO said it wanted to hold another meeting as markets were still vulnerable to supply shocks.
The agency said it had slightly trimmed its forecast for world cereal output in 2013/14 to 2.489 billion tons, 3 million tons lower than a previous estimate, but still 8 percent higher than production in 2012.
It cut its forecast for world wheat output to 704.6 million tons from 709.8 million, mainly due to poorer prospects for the South American crop. Excessive moisture is also hampering the harvest in the Black Sea region and affecting planting for 2014, Abbassian said.
He added that exportable supplies in major wheat exporters were tighter compared with last year, so any production problems could have a strong impact on international prices.
World cereals stocks at the close of seasons ending in 2014 are now seen at about 559 million tons, down 2 percent from a previous estimate in September, though still 12 percent above their opening levels.
FAO's price index hit a record peak of 237.9 points in February 2011, when high food prices helped drive the Arab Spring uprisings in the Middle East and North Africa.
In the summer of 2012 the index began surging to levels close to another peak seen in 2008, in which year there were riots, some deadly, in several poor countries.