The Rome-based U.N. Food and Agriculture Organization said in a report that its price index averaged 230 points in March 2011, down 2.9% from its peak in February but still 37% above March of 2010.

The decrease "brings some welcome respite from the steady increases over the last eight months," said David Hallam, director of the agency's trade and market division

However, Hallam said much will depend on new plantings. Rising oil prices due to turmoil in North Africa and the Middle East and the destruction in Japan from the country's earthquake will also make for uncertainty and volatility over the coming months, he said.

Food experts have been girding for a rerun of the 2007-2008 food crisis, when high prices led to violence and political tensions in many parts of the world.

Luca Chinotti, policy adviser of the Oxfam aid agency, said in an email it is premature to rejoice because many poor communities are already feeling the effects of high prices, while grain stocks in major exporting countries are at low levels.

"Food remains far too expensive for many poor people and the lingering threat of erratic food prices means that the situation could get even worse very quickly," Chinott said. "Urgent action is needed to avoid a global food crisis like that of 2008."

Cereal prices are still 60% higher than in March 2010 and extremely volatile, he said. He urged governments to boost food production in developing countries and make sure there are resources for poor countries to handle rising prices.

The U.N. report said that while most indications point to increased cereal production in 2011, the projected growth may not be sufficient to replenish inventories, in which case prices will remain firm until 2012.

The FAO index records monthly changes in international prices of a basket of food commodities, including cereal, oils and fats and sugar.

From the April 8, 2011, Prepared Foods' Daily News