Better supplies to drive world food prices lower in 2012

Improved grain supplies will help lower food prices this year after sharp rises in 2011 and take the wind out of price volatility, easing inflation concerns, a senior official at the United Nations' food agency told Reuters on Monday.

Over the next decade, however, prices are set to rise for major food and agricultural commodities, Abdolreza Abbassian, senior grain analyst and economist at the UN's Food and Agriculture Organization (FAO), said at the Reuters Food and Agriculture Summit.

"We do expect the food prices in 2012 to be averaging perhaps slightly below 2011. We expect also slightly less volatility this year compared to last year because of better inventories," Abbassian said in a telephone interview.

World food prices measured by FAO hit a record high in February 2011, helping to stoke unrest in some countries. Average annual prices in 2011 were the highest level since the agency started measuring global food prices in 1990.

Food and beverage companies will benefit from lower prices of agricultural commodities, such as grains and meat, after their profits were dented by high commodity costs last year.