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article imageGlobal food prices surge for 8th straight month, hit record high

By Lynn Herrmann     Mar 8, 2011 in Food
Rome - A UN agency reports global food prices rose in February for the eighth consecutive month - reaching a record high since the agency began monitoring them 20 years ago - with fears they will continue to rise because of a volatile international oil market.
The UN’s Food and Agriculture Organization (FAO) reported last week that its Food Price Index reached 236 points in February, a spike of 2.2 percent over January numbers. It is the highest number, based on real and nominal terms, since FAO began tracking them in 1990.
David Hallam, Director of FAO’s Trade and Market Division, said: “Unexpected oil price spikes could further exacerbate an already precarious situation in food markets,” in an FAO news release.
“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,” he added.
The FAO said it expects the global cereal supply to tighten in 2011. A decline in inventories of wheat and coarse grains, as a result of increased demand and a decline in world cereal production, will cause global cereal stocks to drop sharply. International cereal prices have risen dramatically, with major grain export prices increasing at least 70 percent over February 2010 prices.
Analysts with Germany’s Commerzbank have warned that oil prices remain volatile, noting: “There is still a risk of the unrest spreading to other oil producing countries of the region,” according to Agence France Presse.
The FAO’s Cereal Price Index jumped 3.7 percent in February, to 254 points, its highest level since July 2008, due to increased demand and lower supplies. An increased use of maize (corn) by the US for ethanol production and “statistical adjustments to China’s historical supply and demand” are seen as major factors in the increased demand, FAO reports.
Dairy and meat prices also rose in February, up 4 percent and 2 percent respectively over January prices. February’s sugar prices fell slightly over January’s, but still remain 16 percent higher than in February 2010.
FAO state that it expects winter crops in the northern hemisphere to be “generally favorable” and forecasts an increase of 3 percent in global wheat production, provided there is a recovery of wheat production in major producing countries.
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