Global food prices rose 2.3 per cent to a 10-month high in March, owing to a sharp rise in the prices of agricultural commodities (resulting from unfavourable weather conditions in the US and Brazil) and geopolitical concerns related to the Russia-Ukraine standoff.
Data compiled by the United Nations’ Food and Agricultural Organization (FAO) showed its food price index rose 4.8 points to an average 212.8, the highest since May 2013. “As expected, the index was influenced by unfavourable weather conditions in the US and Brazil and geopolitical tensions in the Black Sea region,” said Abdolreza Abbassian, senior economist, FAO.
Now, however, the concerns related to disruptions in grain shipments from Ukraine have subsided. Also, markets had started to discard the negative impacts the difficult domestic economic conditions might have on harvests this year, said an FAO study said.
FAO also reported a higher estimate for world cereal production in 2013, raising its forecast by six million tonnes (mt) to 2 521 mt. This reflects the higher estimates for production of coarse grains and rice in several countries. The forecast for ending stocks has also been raised and it is expected world trade will increase by a significantly higher amount than expected earlier. “It is too early to make accurate production forecasts for cereals, as many crops are yet to be planted and weather remains the key factor influencing harvests,” said FAO’s Abbassian.
It is estimated global wheat production will stand at 702 mt this year, down two mt from FAO’s first forecast in March and two per cent lower than last year’s record harvest. Global rice production is expected to record a modest 0.8 per cent rise at 500.7 mt (milled basis), as growth is likely to be dampened by falling global prices and fears of the El Niño weather phenomenon. Though the outlook for rice is slightly better, the growth in production might not be sufficient to match the growth in population. As a result, inventories could see a decline in the next season.