CHICAGO - FORECASTS for record wheat and rice crops this year have tempered a rally in global grain prices, but there is little relief in sight from high food costs pinching families and world anti-hunger groups alike.

Predictions of a bumper wheat crop this year have cut prices for the grain in the United States, the world's top exporter, by 42 per cent since a record high was set on Feb 27.

But prices are still 64 per cent above those of a year ago.

United States rice prices have fallen 15 per cent the past three weeks, but remain at more than double year-ago levels.

A food price index compiled by the United Nations' Food and Agriculture Organisation (FAO) fell in April for the first time in 15 months, another hint that a surge in food inflation may be nearing an end.

FAO's grains economist Abdolreza Abbassian said 'the worst seems to be behind us'. But analysts said prices for wheat and rice and other staples consumed across the globe still could spike higher on any sign that supplies will be disrupted, including by weather.

'We're expecting pretty good wheat harvests but it's awfully early in 2008, a lot of the 2008 wheat crop isn't even in the ground yet,' said Mr Tom Jackson, economist for Global Insight based in Philadelphia.

Meat prices would depend largely on prices of corn - used to feed livestock - that rose to a record high above US$6 (S$8) a bushel early this month as rains delayed seeding in the United States, the world's top exporter.

Farmers are picking up the seeding pace, pressuring prices at the Chicago Board of Trade.

US soybean prices have tumbled 17 per cent since rising to a record high in March, but remain 73 per cent above the price of a year ago. Prices fell sharply on Thursday amid signs that a farm strike might be resolved in leading exporter Argentina.

Whenever the strike in Argentina ends, supplies from the world's third largest soy exporter would move across the globe to feed livestock and poultry that depend on the protein-rich oilseed.

Meat companies hit hard
Meat companies have been hit hard by the rise in feed costs. Tyson Foods said on Thursday there will be less chicken in supermarkets this summer, and the meat will be more expensive as it passes on higher feed costs to consumers.

'Clearly, higher commodity price increases are having a direct impact on food inflation,' said Mr Bill Lapp, president of consultancy Advanced Economic Solutions.

'In my judgment, the increased costs have not been fully passed on to the consumer, and unfortunately it is very likely that there will be higher prices as we move through 2008 and into 2009,' he said.

FAO reports that food prices rose by nearly 40 per cent in 2007. Thirty-seven countries face food crises, according to the FAO.

As per capita incomes grow, especially in China and India, the demand for products like meat are rising.

And in America, soaring demand for corn from the ethanol industry has beef, pork and chicken producers trimming production because record-high corn prices have cut profit margins.

Global corn supplies, while expected to increase nearly 4 per cent this year to 109.7 million tonnes, are projected to drop back nearly 10 per cent next year to 99 million tonnes and that's assuming normal weather...a risky assumption.

The soaring food costs have touched off protests in several parts of the world and toppled a government in Haiti.

The World Food Programme, facing an unprecedented surge in the price of food it provides to the world's hungry, this month obtained about 60 per cent of the US$755 million in additional funds it requested to cover planned aid donations this year.

In Mexico, an industry group warned on Wednesday of a looming 18 per cent increase in the price of tortillas, a politically sensitive issue in a country where the corn pancakes are eaten more often than bread.

'All indicators suggest that food prices are unlikely to fall any time soon and, in fact, may rise much more depending on countries' decisions about biofuels,' says Mr Mark Rosegrant, a director with the International Food Policy Research Institute in Washington D.C. -- REUTERS