Food prices jump 20.7% a year to record high in February, UN agency says

Food prices jump 20.7% a year to record high in February, UN agency says

Customers walk past a fruit stall at a street market, in Mexico City, Mexico, December 17, 2021. REUTERS/Luis Cortes/File Photo

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ROME, March 4 (Reuters) – (This March 4 article corrects to replace the PCT’s annual change in headline and first paragraph to 20.7% from 24.1% after the FAO issued an official correction)

Global food prices hit a record high in February, led by a surge in vegetable oils and dairy products, to post a 20.7% year-on-year increase, the UN food agency said on Friday.

The Food and Agriculture Organization of the United Nations (FAO) food price index, which tracks the most traded food commodities globally, averaged 140.7 points last month from a lower-revised 135.4 in January. This figure was previously 135.7.

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Rising food prices have contributed to a broader surge in inflation as economies recover from the coronavirus crisis and the FAO has warned that higher costs endanger the poorest people in import-dependent countries.

FAO economist Upali Galketi Aratchilage said worries about crop conditions and export availability only partly explained the rise in global food prices.

“A much bigger push in food price inflation is coming from outside of food production, particularly from the energy, fertilizer and feed sectors,” he said. “All of these factors tend to squeeze the profit margins of food producers, discouraging them from investing and increasing production.”

Data for the February report was mostly compiled before the Russian invasion of Ukraine. Worries over tensions in the Black Sea region were already weighing on agricultural markets even before the violence erupted, but analysts warn that a prolonged conflict could have a major impact on grain exports. Read more

The FAO said its vegetable oil index rose 8.5% month-on-month in February to a new record high, propelled by higher prices for palm, soybean and coconut oil. sunflower. Ukraine and Russia account for around 80% of world sunflower oil exports.

The grain price index rose 3.0% on the month, with maize prices up 5.1% and wheat prices up 2.1%, largely reflecting uncertainty over flows global supply from Black Sea ports. Read more

The FAO Dairy Price Index rose 6.4%, its sixth consecutive monthly rise, supported by tight global supplies, while meat prices rose 1.1% in February.

In contrast, sugar was the only index to post a decline, losing 1.9% from the previous month, partly due to favorable production prospects in major exporters India and Thailand.

The FAO also released its first projections for cereal production in 2022, seeing global wheat production rise from 775.4 million in 2021 to 790 million tonnes, in part thanks to hopes of high yields and extensive plantings in Canada, in the United States and Asia.

The UN agency, however, warned that its projections did not take into account the possible impact of the conflict between Russia and Ukraine.

The FAO said maize productions in Argentina and Brazil in 2022 were forecast at well above average levels, especially in Brazil where the maize harvest hit a record high of 112 million tonnes.

World cereal utilization in 2021/22 is forecast to increase by 1.5% from the 2020/21 level, reaching 2.802 billion tonnes. The FAO forecast for world cereal stocks at the end of the seasons in 2022 was 836 million tonnes.

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Editing by Crispian Balmer

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