UPDATE 1-Global food prices steady in December, down in 2013-FAO

Thu Jan 9, 2014 5:47am EST

ROME Jan 9 (Reuters) - Global food prices rose slightly in December after staying flat the month before, but prices on average declined 1.6 percent in 2013 versus the previous year, the United Nations food agency said on Thursday.

The Food and Agriculture Organisation's (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 206.7 points in December, a marginal rise from a revised 206.4 in November.

FAO said large supplies pushed down international prices of oils, sugar, and cereals except for rice.

But the decrease in prices in those markets was balanced by an opposite trend in meat and dairy, which hit records in 2013 according to FAO.

FAO senior economist Abdolreza Abbassian told Reuters by telephone that he saw ample supply and good opportunities for rebuilding inventories as likely to continue to weigh on cereals prices for the next few months.

"This situation is likely to keep some downward pressure on the grain sector for still some months to come," Abbassian said.

Demand-driven increases in higher meat and dairy prices could taper, however.

"Considering how high they are... perhaps the scope for stronger increases in the next few months are much less than in the last few months," Abbassian said.

Record harvests drove down cereals prices particularly in wheat and maize over 2013, and the average cereals price index for December was 191.5 points, its lowest since August 2010.

Meanwhile, the dairy price index averaged 243 in 2013, its highest annual average ever, FAO said. Demand from Japan and China drove up beef in particular, and the meat index was at historically high levels in 2013, FAO said.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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