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World food prices fall for first time in eight months

ROME, Apr 7 – World food prices fell for the first time in eight months in March after hitting record highs at the start of the year, the UN\’s Food and Agriculture Organisation (FAO) said on Thursday.

The FAO\’s Food Price Index dropped after eight months of continuous price spikes to an average 230 points in March, down 2.9 percent from its peak in February, but still 37 percent above March 2010, the Rome-based agency said.

"The decrease in the overall index this month brings some welcome respite from the steady increases seen over the last eight months," said David Hallam, director of FAO\’s trade and market division.

"But it would be premature to conclude that this is a reversal of the upward trend," he added.

March was extremely volatile for grains, largely due to growing economic uncertainties and the turmoil in North Africa and parts of the Near East as well as the Japanese earthquake and tsunami, the FAO said.

However, the Food Price Index, which monitors average monthly price changes for a variety of key staples, showed that international prices of oils, sugar and cereals had dropped.

Rice prices also fell as a result of abundant supply in exporting countries and sluggish import demand.

By contrast, dairy and meat prices were up, although only marginally in the case of meat.

"We need to see the information on new plantings over the next few weeks to get an idea of future production levels," Hallam said.

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"But low stock levels, the implications for oil prices of events in the Middle East and North Africa and… Japan all make for continuing uncertainty and price volatility over the coming months," he said.

The oil and fats price index fell 19 points in March, breaking nine months of consecutive increases, while the sugar price index averaged 372 points — down as much as 10 percent from the highs of January and February.

The dairy price index averaged 234 points, up 1.9 percent from the previous month and 37 percent above its level in March 2010, while the meat price index changed little from its February levels at an average of 169 points.

World food prices hit record highs at the beginning of the year and the agency had warned in March that oil price spikes could push them even higher as increasing violence in Libya sent jitters through commodity markets.

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