The United Nation's Food and Agriculture Organization today forecast 2012 world wheat production to be the second highest on record at 690 million metric tons (MMT) and said international food prices rose 1% in February -- the second increase in two months.
In its quarterly Crop Prospects and Food Situation Report, the FAO says while plantings have increased or are forecast to increase in many countries this year in response to continuing strong prices, a return to normal yields is expected in areas where record highs were achieved last year.
The FAO Food Price Index (FFPI) averaged 215 points in February 2012, roughly 1% (2.4 points) more than the revised January figure. The increase in the February FFPI was mostly driven by higher prices of sugar, oils and cereals while dairy prices fell slightly after a marked rise in January. At its current level, the FFPI is 10% below its peak in February 2011.
A breakdown of the index follows:
- The FAO Cereal Price Index averaged 227 points in February, up 2 percent, or 4.4 points, from January. International wheat prices rose most followed by maize, while rice quotations were generally lower.
- The FAO Oils/Fats Price Index registered another gain in February to 239 points, 2 percent or 5 points, higher than in January. Poor monthly production growth in palm oil, together with the prospect of a tight supply and demand balance for total vegetable oils were among the reasons.
- The FAO Meat Price Index averaged 175 points in February, virtually unchanged from the previous month’s level. Prices of pig meat gained 3.4 percent, sustained by strong purchases in Asia and recent disease outbreaks in the Russia Federation. By contrast, prices of poultry, bovine and sheep meat lost some ground.
- The FAO Dairy Price Index averaged 205 points in February, down marginally from January, The decline was mainly caused by falling skim milk powder and casein quotations. However, prices of butter, cheese and whole milk powder remained relatively steady.
- The FAO Sugar Price Index rose to 342 points in February, up 2.4 percent, or 8 points, from January, but still 18 percent (76 points) lower than in February last year. Last month’s increase was largely driven by unfavorable weather conditions in Brazil, the world's largest producer and exporter of sugar.