Rome - The UN food agency raised its outlook for world cereal production and stocks yesterday as prices were dragged down for the second month in a row by expectations that ample supply of most food commodities would continue.

The Food and Agriculture Organisation’s (FAO’s) price index, which measures monthly price changes for a basket of grains, oilseeds, dairy, meat and sugar, averaged 207.9 points last month.

That was a fall of 2.5 points or 1.2 percent from April, when a sharp drop in dairy prices pulled the index down 3.5 points or 1.6 percent from the previous month.

The agency raised its world cereal production forecast to nearly 2.48 billion tons, almost 1 percent higher than it reported the month before.

It predicted world cereal stocks at the end of crop seasons next year would be 576 million tons, an increase of almost 10 million tons from last month’s forecast.

“Markets are experiencing a rather ample supply situation and expect good harvest prospects,” FAO senior economist Abdolreza Abassian said. “This is the driving factor behind the downward pressure on prices.”

Dairy prices fell sharply again last month, registering a 5 percent slide, following a period of very high prices last year and early this year due to limited export supplies.

Grain prices fell 1.2 percent in the month, mostly due to good maize supply prospects in 2014/15. Wheat prices, which had contributed to price rises in recent months partly on fears of disrupted trade from Ukraine, fell in the second half of last month as shipping patterns from the country remained regular and US weather improved, the FAO said.

Vegetable oil prices also fell while meat prices changed little from April and sugar prices rose 3.7 percent. – Reuters