United Nations, Apr 8 (IANS): World cereal production in 2016 is set to reach 2,521 million tonnes, just 0.2 percent off last year's large output and the third highest global performance on record, said a UN spokesman.

"Large inventory levels and relatively sluggish global demand mean that market conditions for staple food grains appear stable for at least another season," said Deputy UN spokesman Farhan Haq.

He cited the first forecast for the new season by the Food and Agriculture Organization (FAO).

Also on Thursday, the FAO released its monthly Food Price Index.

Overall, the Index rose by 1 percent compared to February, as soaring sugar prices and continued increase in palm oil quotations more than offset plunging dairy product prices, he said.

In March, the Index averaged its highest level in 2016, but still some 12 percent below its level of last year.

The small decline in 2016-17 world cereal production portended by FAO would largely result from a lower worldwide wheat production, which is now expected to amount to 712.7 million tonnes, some 20 million tonnes less than in 2015, said FAO's first forecast for the new season.

The decline mostly reflects smaller plantings in the Russian Federation and Ukraine, both affected by dry weather.

Global output of coarse grains is projected at 1,313 million tonnes, up by about 11 million tonnes from 2015, with expected increases in maize production more than offsetting declines for barley and sorghum.

World rice production is predicted to recover with a return to normal weather conditions in northern-hemisphere Asia, where erratic rains have affected planting activity for the past two seasons, FAO said.

Global output, although impacted by unattractive prices, is predicted to rise 1.0 percent to 495 million tonnes.

International trade in cereals in 2016-17, however, is poised to decline for the second consecutive season -- by 1.4 percent to 365 million tonnes -- due to ample stockpiles and modest demand growth in many importing countries.