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World Food Prices Little Changed as Dairy Falls, Corn Climbs

World food prices were little changed in May as rising corn prices due to tightening export supplies compensated for a drop in the cost of dairy, the United Nations’ Food & Agriculture Organization reported.

An index of 55 food items tracked by the FAO fell to 215.2 points last month from a revised 215.8 points in April, the Rome-based FAO wrote in an online report today. The measure, which climbed to a record 237.9 points in February 2011, is up 5.1 percent from a year earlier.

“The small decline in May was the result of falling dairy and sugar prices, which more than offset an increase in cereals,” the FAO wrote. “Supplies of milk products for trade are still constrained by weather-related factors affecting milk production in most of the major exporting countries.”

The FAO dairy price index fell for the first time in 10 months, after rising in April to the highest since December 2007 on shrinking milk supply. Milk collection in New Zealand, the world’s biggest dairy exporter, probably fell 1 percent to 1.5 percent in the 2012-13 season through to the end of May because of drought, according to Fonterra Cooperative Group Ltd.

The FAO’s measure of world dairy prices fell 3.5 percent to 249.8 points after jumping 15 percent to 258.8 points in April and rising 11 percent to 225.3 points in March. The drop was led by skimmed milk powder and butter, while average prices of cheddar cheese rose “slightly,” the report showed.

The UN agency’s index of world grain prices rose 1.9 percent to 238.9 points in May. Export prices for corn in the U.S. Gulf Coast region as reported by the International Grains Council advanced 3.4 percent last month.

“Last month’s increase was mostly associated with a strong rebound in maize prices, mostly a reaction to tightening export supplies and planting delays in the U.S.,” the FAO said, using another name for corn. “By contrast, wheat and rice quotations were largely unchanged.”

An index of sugar prices fell 1 percent to 250.1 points, while the FAO’s gage of the cost of cooking oils was unchanged at 199 points. The UN agency’s measure of global meat prices was also little changed at 179.3 points.

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