Global Food Prices Surge in March: FAO

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Global Food Prices Surge in March: FAO

Prices of food rose on a global scale to the highest level in close to 12 months, as bad weather hampered agriculture and the political crisis in Ukraine exerted a toll, the United Nation’s FAO said on Thursday.

The price index workout by The Food and Agriculture Organization (FAO) is a gauge of monthly prices for foodstuffs such as cereals, oil-seeds, meat and others. The index stood at 212.8 points on average in March, after increasing 4.8 points or 2.3% from the previous month. The measure hit its highest point last month since May 2013.

Bad weather played a predominant role in enhancing food prices. However, when Russia annexed Crimea from Ukraine, some level of fear was introduced in the grains market, with wheat being the hardest hit. A senior economist with FAO said that the particular Russia-Ukraine event could have a negative impact on trade patterns.

“Political tensions of the sort we see today have the risk of taking us back to a Cold War situation, where countries make purchases of grain not only based on price differences offered but also because of political alliances,” Abdolreza Abbassian told Reuters.

Prices of sugar rose the highest, with the commodity’s price index surging 7.9% from a month earlier after being affected by the drought in Brazil and Thailand’s reduced sugarcane production.

Declining demand for dairy products in China and surplus production in New Zealand pushed the price index of the commodity downwards, FAO data showed.

As reported by Bloomberg, the price index of cooking oils rose 3.5% to reach 204.8 points, the highest point since September 2012. Limited stocks of palm oil in Malaysia fueled increase in price of the product. Also, rising demand in Indonesia and the possibility of El Nino later in 2014 contributed to a rise in palm oil’s price index.

To contact the reporter of the story; Jonathan Millet at john@forexminute.com