Food price surge may be nearing end

By Sam Nelson - Analysis

CHICAGO (Reuters) - Forecasts for record wheat and rice crops this year have tempered a rally in global grain prices, but there is little relief in sight from high food costs pinching families and world anti-hunger groups alike.

Predictions of a bumper wheat crop this year have cut prices for the grain in the United States, the world's top exporter, by 42 percent since a record high was set on February 27. But prices are still 64 percent above those of a year ago.

U.S. rice prices have fallen 15 percent the past three weeks, but remain at more than double year-ago levels.

A food price index compiled by the United Nations' Food and Agriculture Organization (FAO) fell in April for the first time in 15 months, another hint that a surge in food inflation may be nearing an end.

FAO's grains economist Abdolreza Abbassian told Reuters "the worst seems to be behind us."

But analysts said prices for wheat and rice and other staples consumed across the globe still could spike higher on any sign that supplies will be disrupted, including by weather.

"We're expecting pretty good wheat harvests but it's awfully early in 2008, a lot of the 2008 wheat crop isn't even in the ground yet," said Tom Jackson, economist for Global Insight based in Philadelphia.

Meat prices would depend largely on prices of corn -- used to feed livestock -- that rose to a record high above $6 a bushel early this month as rains delayed seeding in the United States, the world's top exporter.