London (Platts)--9Dec2009/720 am EST/1220 GMT

Global food prices are once again on the rise and biofuels continue to be a leading driver of demand for agricultural commodities, despite the slow down in the green fuels industry, the UN Food and Agriculture Organization said Wednesday in its Food Outlook report.

"On the demand side, biofuels remain a leading driver, but the year-on-year growth has slowed down compared with the past few years," said an FAO statement.

"In the United States, the largest user of grains for biofuel production, the use of maize for ethanol has grown by 14% this season, down from 40% in the run-up of the high price period," it added, referring to the 2007/2008 food price spike.

According to the UN body, the FAO Food Price Index, which is a food basket composed of cereals, oilseeds, dairy, meat and sugar, registered four straight monthly increases, raising concerns about another round of high prices.

"Recent developments in world agricultural markets for basic food commodities have raised concern about a possible return to another round of high prices," FAO said.

The FAO Food Price Index averaged 168 points in November, the highest value since September 2008, the UN agency said. The value, however, was still 21% below its peak in June 2008.

The UN agency also said that market conditions influencing price increases this time are different from those that triggered the 2007/2008 food price crisis.

"The agricultural market situation today is different from that of 2007/08. World cereal stocks are at far more comfortable levels than they were two years ago, with the stock-to-use ratio at almost 23%, 4 percentage points more than at the time," FAO said.

"In general, supplies held by exporters are far more adequate to respond to rising demand than they were during the price surge period," it added.

--Isis Almeida, isis_almeida@platts.com