* FAO food price index falls 2 points to 209
* Food index averages 212 in 2012, down 7 pct
* Prices to stay high but situation may be calmer
(Adds economist quotes, details, background)
By Catherine Hornby
ROME, Jan 10 Food prices will stay at high
levels in 2013 and low stocks pose the risk of sharp price
increases if crops fail, the United Nations' food agency said on
Thursday, after its index showed prices fell for the third month
running in December.
A surge in food prices over the summer of 2012 fuelled by
the worst drought in more than half a century in the United
States and dry weather in other major exporters raised fears of
a new food crisis such as the one seen in 2008.
But the Food and Agriculture Organisation's (FAO) Food Price
Index, which measures monthly price changes for a basket of
cereals, oilseeds, dairy, meat and sugar, fell for the third
month in a row in December to 209, its lowest level since June,
led by declines in cereals and oils prices.
Soy prices have fallen on forecasts of near-record South
American production, bringing down other grains prices.
For 2012 as a whole, the index averaged 212, down 7 percent
compared to 2011, but still at historically high levels.
"Prices are high and will remain high in 2013/2014," FAO
senior economist Abdolreza Abbassian said in a telephone
"The fact that stocks remain low and the possibility of
hopefully a better economic situation in 2013/14 that should
encourage consumption are issues the market will get some price
support from," he said.
FAO said in December it expected world cereal stocks to be
about 495 million tonnes at end-2013, down 5 percent from their
Nevertheless Abbassian said that better international
coordination was helping prevent countries from using export
bans, which was creating a calmer situation compared to 2008,
when unexpected national controls worsened the food crisis.
Good supply prospects for corn and soybeans in the southern
hemisphere would help offset tightness in the northern
hemisphere, reducing the risk of supply shocks, he said.
But the situation for wheat remained more cautious, he said,
due to concerns over high usage and a lack of high quality wheat
in the market.
FAO's index is below a peak of 238 points hit in February
2011, when high food prices helped drive the Arab Spring
uprisings in the Middle East and North Africa.
In the summer of 2012 it reached levels close to those seen
in 2008 when riots, some deadly, broke out in several poor
(Editing by Keiron Henderson)