Wheat production in 2016 will outstrip utilisation for the fourth year in a row, boosting inventories of the world's most important cereal to a 15-year high, with major surges in China and the United States.

Total wheat utilisation will actually decline marginally as more of the world's farmers turn to maize to feed their livestock. That's an increasingly popular option in China, where the government's decision to lower maize reserves is expected to boost consumption of that coarse grain.

China's move should have important effects on international markets, leading to sharp declines in demand for barley and sorghum. Dwindling international trade may intensify competition among major exporters, FAO said.

Dairy prices are projected to remain weak, while fish prices appear poised to remain contained due to a vibrant aquaculture production.

Meat production in general is expected to be stable although poultry output - largely for export - is forecast to grow.

Food prices rose in May as dairy gained some ground

The organisation has also just released its latest FAO Food Price Index, which rose in May for the fourth month in a row, increasing by 2.1 per cent from April to 155.8 points - still some 7 per cent below the level reported one year ago.

The FAO Cereal Price Index rose 1.6 per cent from April, led by a sharp increase in maize prices and buoyed by stronger quotations for Indica and aromatic rice varieties.

The FAO Meat Price Index rose 2 per cent, spurred by brisk import demand from Asia for pigmeat from the European Union.

The FAO Dairy Price Index, which is 24 per cent below its level of a year-ago, also eked out a 0.4 per cent increase thanks to improved prices in the EU and sustained international demand for whole milk powder and butter.