ROME, ITALY — The United Nation’s Food and Agricultural Organization's (FAO) Food Price Index rose 1% to 234 points in June 2011 — 39% higher than in June 2010 but 4% below its all-time high of 238 points in February of this year.

A strong rise in international sugar prices was behind much of the increase.

The FAO Cereal Price index averaged 259 points in June, down 1% from May but 71% higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the Russian Federation's export ban contributed to the price drop.

However, the maize market remained tight because of low 2010 supplies and continued wet conditions in the U.S. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world's largest rice exporter.

The FAO Sugar Price Index rose 14% from May to June, reaching 359 points, 15% below its January record. Production in Brazil, the world's biggest sugar producer, is forecast to fall below last year's level.

The FAO Dairy price Index averaged 232 points in June, virtually unchanged from 231 points in May. The FAO Meat Price Index averaged 180, marginally up from May with poultry meat rising three percent and climbing to a new record, while pig meat prices declined somewhat.

Following two consecutive revisions to the U.S. crops and planting prospects for 2011, FAO's latest forecast for world cereal production in 2011-12 stands at nearly 2.313 million tonnes, 3.3% higher than last year and 11 million tonnes above FAO's last forecast on June 22.

World cereal utilization in 2011-12 is forecast to grow 1.4% from 2010-11, reaching 2.307 million tonnes, just 5 million tonnes under forecast production.

World cereal stocks at the close of the crop season in 2012 are now expected to stand 6 million tonnes above their opening levels. While wheat and rice inventories are expected to become more comfortable, coarse grains stocks, especially maize, would remain tight.