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FAO says bumper crops bring down food prices, but demand rising in Asia

World food prices fell in January for the first time in three months, the UN’s Food and Agriculture Organization (FAO) has said. Stable stocks and production contain prices, but demand is rising again notably in Asia.

The Food and Agriculture Organization's (FAO) food price index averaged 203.4 points in January, down from a December reading of 206.2 points, the United Nations' organization announced Thursday.

FAO's index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, fell because supply outstripped demand in most food categories in the month, FAO said.

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

FAO noted that bumper grain crops helped bring down cereal prices by 1.6 percent from December and a staggering 23 percent from January 2013. Overall food prices declined in 2013, FAO said, coming down from the previous two years which had seen historic peaks that plunged the developing world into a major food crisis.

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FAO also said, however, that January saw an upturn in demand, especially in Asia, which could limit the decline in prices. In addition, anticipated growth of 8.5 percent in world cereal production would shore up prices, making prospects for food prices in 2014 favorable.

uhe/dr (Reuters, AFP)

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