U.S. crop worry to fuel world food prices in July - U.N.

MILAN (Reuters) - World food prices are expected to rally from three months of falls this month as concern over the impact of relentless dry weather on U.S. corn and soybean crops drive values up on international markets, the United Nations' Food and Agriculture Organisation (FAO) said on Thursday.

"We do not rule out further price increases and more price volatility until U.S. harvests. The next couple of months are going to be quite bumpy," FAO's senior economist and grain analyst Abdolreza Abbassian told Reuters.

The FAO Food Price Index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 201 points in June against revised 205 points in May, the FAO said in its monthly index update.

The FAO cut its 2012 world cereals output forecast to 2.396 billion tonnes, 23 million tonnes down from a previous estimate.

The FAO cut its forecast for maize production in the United States to 350 million tonnes, down 25 million tonnes from the previous but still 36 million tonnes, or 11.5 percent higher than in 2011. (Reporting by Svetlana Kovalyova; Editing by Veronica Brown)