World food prices soar to 10-month high as drought damages crops
An index of 55 food items climbed 2.3% to 212.8 points from a restated 208 in February, according to the Rome-based UN Food and Agriculture Organisation. The gauge, at its highest since May, is still down 1% from a year earlier.
US Gulf wheat export prices tracked by the International Grains Council jumped 12% last month, the biggest surge since July 2012, as crop conditions in Texas and Kansas deteriorated due to drought. Beef prices rose as dry weather affected production in Australia and the US, while sugar gained on drought in Brazil, the biggest producer.
“Last month’s increase was largely driven by unfavourable weather conditions affecting some crops and geopolitical tensions in the Black Sea region,” the FAO wrote.
Russian troops last month took control of the Crimea peninsula to the south-east of Ukraine’s main grain-export ports. About 25% of Kansas wheat was in poor to very poor condition as of March 30, from 21% a week earlier, the US department of agriculture has reported.
The FAO’s index of grain prices climbed 5.2% last month to 205.8 points, the biggest jump since July 2012. That’s still below where the indicator was in July, and 14% below the year-earlier level.
Coffee, pigs, and corn are the best performers on the S&P gauge of 24 commodities this year, after sliding last year.
A gauge of sugar prices jumped 7.9% in March to 253.9 points, the most since July 2012. Drought in Brazil and reduced cane output in Thailand boosted the sweetener.
The cooking oils index advanced 3.5% to 204.8 points, the highest level since September 2012. Palm oil prices were also lifted.
“The rise in the index mainly reflected a surge in palm oil, on continued concerns over the impact of protracted dry weather in south-east Asia,” the FAO wrote.
Dairy costs tracked by the agency slipped 2.5% to 268.5 points on reduced buying by China and uncertainty over trade with Russia. The FAO meat price index advanced 1.5% to 185 points, on higher costs for beef and pork.
“The main driver was higher bovine prices, which were associated with dry weather conditions affecting production in both Australia and the US,” the FAO said. “Pig meat also rose, in part on concern over the effect of porcine epidemic diarrhoea virus on export supplies in the US.”
US boxed pork carcass prices surged 57% in the first quarter, the most on record. Its pig herd at the start of March was the lowest since 2007 as a piglet-killing virus was found in at least 27 states.
In a separate report, the FAO forecast world wheat production will drop 2% in 2014 to 702m metric tonnes, 2m tonnes less than predicted last month, on reduced planting in Canada, dry conditions in Australia, and lower yields in Russia and Ukraine. US output is forecast to climb 3.5%.
The UN agency lifted its estimate for 2013 global production of wheat, coarse grains and milled rice by 6.2m tonnes to a record 2.521bn tonnes.
