World food prices jumped 20.7 pc y-o-y in Feb as price of vegetable oils, dairy products rise

The Food and Agriculture Organization's (FAO) food price index, which tracks food commodities that are most traded across the world, averaged 140.7 points in February against a downwardly revised 135.4 in January. That figure was previously given as 135.7, reported Reuters.

FAO economist Upali Galketi Aratchilage said crop conditions and export availabilities partially explain the increase in global food prices, according to report.

"A much bigger push for food price inflation comes from outside food production, particularly the energy, fertilizer and feed sectors," he said, the report stated.

"All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production."

Data for the February report was mostly compiled before the Russian invasion of Ukraine, the report stated.

FAO said its vegetable oils index rose 8.5 percent month-on-month in February to chalk up another record high, propelled by rising palm, soy, and sunflower oil prices. Ukraine and Russia account for about 80 percent of global exports of sunflower oil.

The cereal price index rose 3.0 percent on the month, with maize prices up 5.1 percent and wheat prices increasing 2.1 percent, largely reflecting uncertainty about global supply flows from Black Sea ports, Reuters reported.

FAO's dairy price index grew 6.4 percent, its sixth continuous monthly rise, propelled by tight global supplies, while meat prices rose 1.1 percent in February, the report added.

FAO's first projections for cereal output in 2022 forecast global wheat production growing to 790 million tonnes from 775.4 million in 2021, partly on hopes of high outputs and extensive planting in Canada, the United States and Asia.

The U.N. agency warned that its projections excluded the potential impact of the conflict between Russia and Ukraine.

Maize yields in Argentina and Brazil in 2022 were predicted at well-above-average levels, mainly in Brazil where the maize crop yield was seen going a record high of 112 million tonnes.

World cereal utilization in 2021/22 was forecast to rise 1.5 percent above the 2020/21 level, hitting 2.802 billion tonnes. FAO's forecast for world cereal stocks by the close of seasons in 2022 stood at 836 million tonnes, the Reuters report stated.