By Naomi O'Leary
ROME, March 6 Global food prices rose 2.6
percent in February in the sharpest climb since mid-2012 due to
unfavourable weather, the United Nations food agency said on
Thursday, with the crisis in Ukraine threatening to cause future
The Food and Agriculture Organisation's (FAO) price index,
which measures monthly price changes for a basket of cereals,
oilseeds, dairy, meat and sugar, averaged 208.1 points in
February, up 5.2 points from a slightly revised January index of
Unfavourable weather conditions in the southern hemisphere
and parts of the United States were the most important cause of
the rises, FAO's senior economist Abdolreza Abbassian said.
However, he said market nervousness about the crisis in
Ukraine could affect prices in March.
"The situation in the Black Sea has created a certain level
of worry in the markets. It's difficult to predict how this is
going to unfold but obviously we are in a very short-term price
shock situation," Abbassian said.
"Things could come back to normal once the Ukraine situation
improves. Otherwise there could be more volatility in the
markets for the foreseeable future."
Markets are carefully watching a developing crisis over a
Russian military intervention in the Crimea region of Ukraine,
the world's sixth-largest wheat exporter which ships to Egypt
and other import-dependent countries in the Middle East and
In February prices rose in all commodity groups except meat.
The strongest rise was in the sugar sub-index, up 6.2 percent
from January due to concerns of crop damage from dry weather in
Brazil and forecasts indicating a drop of output in India.
The vegetable oil price index rose 4.9 percent on the
previous month, the second-largest increase among the indices
This was driven by strengthening palm and soy oil prices due
to dry weather in Southeast Asia and South America. A 3.6 rise
in the cereal price index reflects concerns over the effect of
freezing weather on wheat crops in the United States, FAO said.
The last time the food price index rose so significantly was
in July 2012 due to a drought in the U.S. Midwest which sent
corn and soybean prices to record highs.
At the time, this sparked fears of a repeat of a food crisis
in 2007/08 in which major producers restricted exports in an
attempt to control domestic prices.
However, stocks are currently ample. FAO raised its forecast
for 2013 world cereal production to a record 2.515 billion
tonnes on Thursday, up 13 million tonnes from its previous
forecast and said the early outlook for 2014 wheat production is
The FAO raised world cereal stocks forecasts for end-2014
season slightly to 578.5 million tonnes, meaning they would be
14.5 percent above their reduced opening levels and the highest
in 12 years, FAO said.
The rise in the 2013 forecast for world cereal production
was due to higher estimates from Australia, which has just
concluded its winter grain harvest, and upward revisions for
China's wheat and coarse gains crops.
Though it is too early to forecast global cereal output for
2014, FAO gave its first world wheat output forecast for the
year at 704 million tonnes.
This was a drop of 1.7 percent from the 2013 record harvest,
but would still be the second largest crop ever, FAO said.