March 10, 2018
Rising prices of grains, dairy products drive global food costs up in February
Rising world prices for grains and dairy products pushed global food prices up in February, according to the UN Food and Agriculture Organisation.
The FAO food price index -- a monthly trade-weighted index tracking international market prices of five major food commodity groups—increased 1.1% to an average of 170.8 points in February from January and just 2.7% below its year-ago level.
The FAO cereal price index increased 2.5%, posting its second consecutive monthly rise, with unfavourable weather adversely affecting the outlook for winter wheat in the US and corn in Argentina.
FAO also lowered its projections for worldwide wheat harvests this year, adding that inventory levels are poised to hit a record high.
The dairy price index also rose, by 6.2%, in February as international price quotations increased for butter, cheese and whole and skim milk powders. Strong global demand, coupled with lower-than-expected milk output in New Zealand, drove the hike.
Meat price index
The meat price index was broadly unchanged, as poultry meat prices fell for the fourth month in a row, offsetting a rise in bovine meat price quotations.
Global stocks of wheat and coarse grains are both poised to hit record levels of 272.7 million tonnes and 309.8 million tonnes, respectively, in the current marketing year, according to the Cereal Supply and Demand Brief.
With harvesting of last year's cereal crops now almost complete, FAO raised its global cereal production estimate for 2017 to 2.642 billion tonnes
FAO also issued its first forecast for global wheat production in 2018, now seen at 744 million tonnes. While above average, that would represent the second annual dip, reflecting lower anticipated yields in the European Union and the Russian Federation.
Unfavorable weather in South America and Southern Africa, along with an expected contraction in plantings, also points to a likely output decline for corn in the southern hemisphere.