Weather-related events and increased demand came into play as the Food and Agriculture Organisation (FAO) Food Price Index registered its sharpest increase since mid-2012, averaging 208.1 points in February 2014.
The new level is 5.2 points, or 2.6 per cent, above a slightly revised index for January, but is still 2.1 per cent lower than last year at the same time.
The figures were released amid news reports of spikes in wheat and corn prices in response to recent developments in Ukraine, though the February increase in the Index cannot be entirely attributed to those events.
The Index, based on the prices of a basket of internationally-traded food commodities, saw price upticks in all commodity groups, with the exception of meat, which fell marginally. The strongest increases since January have been seen in sugar (+6.2 per cent) and oils (+4.9 per cent), followed by cereals (+3.6 per cent) and dairy (+2.9 per cent).
“This month’s increase follows a long period of declining food prices in general. But it’s too early to say if this is a true reversal of the trend,” FAO Senior Economist Concepción Calpe said. “The weather is probably a major force driving up prices for certain commodities like sugar or wheat, but brisk demand is also an important factor underpinning maize, dairy and oil prices.”
The FAO Cereal Price Index averaged 195.8 points in February, up 6.8 points, or 3.6 per cent, from the previous month. The price bounce reflected mainly concerns over wheat crops in the United States, a strong demand for coarse grains for both feed and biofuel and high Japonica rice prices. Still, cereal prices remain, overall, 18.8 per cent below their level in February last year.
Vegetable oils averaged 197.8 points in February, up 9.2 points (or 4.9 per cent) from January, amid concerns over unfavourable weather in Southeast Asia and South America, and buoyant demand worldwide, including demand for palm oil from biodiesel producers. Dairy averaged 275.4 points in February, a rise of 7.7 points, or 2.9 per cent, over January and meat averaged 182.6 points in February, only 0.5 points below the revised January level.
Following a three-month decline, sugar prices recovered in late February, prompted by concerns of crop damage from dry weather in Brazil and recent forecasts pointing to a potential drop of output in India.
The FAO Sugar Price Index averaged 235.4 points in February, up 13.7 points, or 6.2 per cent, from January.
