The Food and Agriculture Organization (FAO) of the United Nations is reporting that an index of 55 food commodities increased slightly last month. From their website this morning:
Food prices remained virtually steady in April after falling in March following eight months of successive increases, FAO announced today.
However, while the FAO Food Price Index averaged 232 points in April, little changed from March, it was still 36 percent above April 2010 and only two percent below its peak in February 2011.
A fall in sugar prices and a decline in rice helped stabilize the index, but international prices of nearly all other food commodities remained firm.
“A sliding dollar and increased oil prices are contributing to high food commodity prices, particularly grains,” said David Hallam Director of FAO’s Trade and Market Division. “With demand continuing strong, prospects for a return to more normal prices hinge largely on how much production will increase in 2011 and how much grain reserves are replenished in the new season.”
The FAO Food Price Index was 231 points in March. It reached an all-time high in February, when the index hit 237.2 points.
Bloomberg’s Rudy Ruitenberg broke down the UN agency’s latest report this morning and noted:
Corn has almost doubled in the past 12 months on speculation that more planting in the U.S., the world’s largest grower, won’t be sufficient to rebuild global stocks. Wheat surged 57 percent over the same period and soybeans gained 39 percent as flooding ruined crops in Canada and Australia and drought reduced harvests in Russia and Europe.
Of the grains, corn “is the most worrisome,” [FAO senior economist Abdolreza] Abbassian said in a statement. “We would need above-average, if not record, yields in the U.S.,” however, “plantings so far have been delayed considerably due to cool and wet conditions on the ground,” he said.
The FAO’s gauge of grain prices, which account for 27 percent of the overall index, jumped to its highest level since June 2008, advancing to 265.1 points in April from 251.2 the previous month.
According to the agency, much more food will be required down the road to feed the world’s growing population. Ruitenberg added:
Food output will have to climb by 70 percent from 2010 to 2050 as the world population swells to 9 billion and rising incomes boost meat and dairy consumption, the FAO forecasts.
Here’s hoping for some bumper crops this year- and in the foreseeable future.
“Global food prices hold steady.” Food and Agriculture Organization of the United Nations. 5 May 2011. (http://www.fao.org/news/story/en/item/73931/icode/). 5 May 2011.
Ruitenberg, Rudy. “World Food Prices Rise to Near-Record High as Inflation Speeds Up, UN Says.” Bloomberg. 5 May 2011. (http://www.bloomberg.com/news/2011-05-05/food-prices-approach-record-high-as-grain-prices-fuel-inflation-worldwide.html). 5 May 2011.
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