New statistics released this week by the United Nation’s Food and Agriculture Organization (FAO) reveals global food prices reached record highs in February and may continue to skyrocket due to political unrest in the Middle East and North Africa, which is causing oil prices to spike.
The UN’s Food Price Index, which measures monthly price changes in a basket of foods including cereals, oilseeds, dairy, meat and sugar, averaged 236 points in February—a 2.2% increase and the eighth consecutive rise since. February’s price index was the highest record in real and nominal terms since the agency started monitoring prices in 1990. Prices of all commodity groups monitored rose again, except for sugar.
"Unexpected oil price spikes could further exacerbate an already precarious situation in food markets," said David Hallam, director of FAO’s Trade and Market Division. "This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing regions are about to start."
FAO predicts a tightening of the global cereal supply and demand balance in 2010/11. In the face of a growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains. International cereal prices have increased sharply with export prices of major grains up at least 70 percent from February last year.
Sources:
* Food and Agriculture Organization: Tight cereal markets as food prices increase again
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