Global food prices dropped in May according to the Food Price Index published Thursday by the Food and Agriculture Organisation (FAO). The index measures price changes in a food basket consisting of commodities such as cereals, dairy products and oilseeds. Food prices averaged 204 points in May, a drop of 9 per cent compared to April. This was the lowest level since September 2010, when prices started to rocket reaching a peak in February 2011 at 238 points. The FAO attributes this drop to a favourable outlook in many producing countries, the strong US dollar and global fears about the European debt crisis. The FAO also predicted world cereal production would reach a new record in 2012 of 2,419 million tonnes, an increase of 3.2 per cent from last year. This increase is attributed mainly to improved forecasts for US maize production and would result in production levels exceeding the expected cereal utilization of 2,376 million tonnes, permitting stocks to be replenished. However, FAO’s grain analyst Abdolreza Abbassian said it is still too early to give the all-clear. "Crop prices have come down sharply from their peak level but they remain still high and vulnerable due to risks related to weather conditions in the critical growing months ahead."