World food prices are steadily increasing

World food prices continue their upward trend and are now at their highest level since February 2015, the latest Food and Agriculture Organisation (FAO) food price index has shown.

The United Nations food body’s index measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar. The basket averaged 175.5 points in February, up 0.5% on January levels.

More significantly, this latest increase has pushed food prices on international to 17.2% above their levels in the same month last year. The FAO index for January was particularly high, with food prices driven up by a sever drought in East Africa.

The FAO now expects cereals output to reach 2.6 billion tonnes in the 2016 season, up 0.3% on previous forecasts. The FAO said that its first forecast of global wheat production in 2017 stood at 744.5m tonnes, a 1.8% decline from the 2016 record level but above the last five-year average.

“With the exception of vegetable oils, the indices of all other commodities used in the calculation of the FFPI rose in February, especially of cereals,” the FAO stated.

Global dairy prices continue to rise. The FAO Dairy Price Index averaged 194.2 points in February, up slightly from the previous month and reaching its highest level since August 2014. At this level, it is 52 points, or 37%, higher than the corresponding period last year.

“While dairy markets are awaiting the emerging trend for export availabilities from the EU and the US as the current dairy year unfolds, supplies to the international market continue to be adequate considering the level of demand,” the FAO said.

“Looking at the general market trends over the past 12 months, butter-fat has been the dairy commodity in strongest demand, which caused butter and whole milk powder prices to increase by substantially more than those of skimmed milk powder and cheese.”

The FAO meat price index averaged 160.6 points in February, up 1.7 points (1.1%) from January, with prices of bovine and ovine meat receiving a boost while those of poultry and pig meat were little changed.

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