World Food Prices Jump Most in 19 Months as Oils and Grains Rise

March 6, 2014 02:50 AM
 
Global Food Demand

World food prices rose 2.6 percent in February, the biggest jump in 19 months, as prices for cooking oils, grains, dairy and sugar all rose, the United Nations’ Food & Agriculture Organization said.

An index of 55 food items rose to 208.1 points from a restated 202.9 in January, when it dropped to the lowest level since June 2012, the Rome-based FAO wrote in an online report today. The gauge is still down 2.1 percent from a year earlier.

Coffee, hogs, corn and sugar are the best performers on the S&P GSCI gauge of 24 commodities so far this year, after sliding last year. Palm oil prices rose last month due to concern about drought in Southeast Asia, while sugar gained on worries of damage due to dry weather in Brazil, the FAO said.

"Last month’s rebound, the sharpest witnessed since mid-2012, resulted from strengthening quotations of all the commodity groups making up the index, except meat, which fell marginally," the FAO wrote.

Last month’s jump in grain prices was helped by concern about wheat crops in the U.S., the largest grower, according to the FAO. Temperatures below 0 degree Fahrenheit (-17.8 degrees Celsius) may have caused some winter kill damage in the U.S. Plains, according to Commodity Weather Group.

The cooking oils index rose to 197.8 points from 188.6 in January, gaining 4.9 percent. Palm oil futures jumped 9.4 percent in Malaysia last month on concern reduced rainfall will hurt yields.

The FAO’s index of grain prices advanced 3.6 percent to 195.8 points from 189 points in January, still down 19 percent below the year-earlier level.

 

Wheat

 

In a separate report, the FAO forecast the world wheat crop will drop 1.7 percent this year on lower yields and area in Canada, which had a record high last year, and on countries that were formerly part of the Soviet Union, where yields are seen returning to average after high levels in 2013.

"The overall reductions expected would more than offset the few, and less marked, increases that are foreseen this year, mainly in the EU, India and the United States," the FAO said in the report.

The UN agency lifted its estimate for 2013 global production of wheat, coarse grains and milled rice by 13.2 million metric tons to a record 2.515 billion tons.

A gauge of sugar prices jumped 6.2 percent, while dairy costs advanced 2.9 percent. The FAO meat price index slipped 0.3 percent in February.

 

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