Global food prices rose 1.9 percent in January, the biggest gain in 11 months as dairy, oilseed and grain costs increased, and may climb further in February, the United Nations Food and Agriculture Organization said.
An index of 55 food items increased to 214.3 points from a revised 210.3 points in December, the Rome-based FAO said on its website today. Prices may post a “slight” gain this month amid uncertainty about crop prospects this year, Abdolreza Abbassian, a senior economist at the FAO, said by phone.
Costlier food is driving up living costs in China, home to about a fifth of the world population. Chinese inflation unexpectedly accelerated in January on the back of food prices, which rose 10.5 percent last month compared with a year earlier, up from 9.1 percent in December, the country’s National Bureau of Statistics reported today.
“It would not surprise me to see a slight price increase in February,” Abbassian said from Rome. “Prices are going to probably remain within this range until there is more certainty about production and the supply situation in 2012.”
The food-price index may swing between the December low and the January or February level as a top until 2012 crop prospects become more clear, Abbassian said. All commodity groups in the index advanced in December, according to the FAO.
“International prices of all major cereals with the exception of rice rose in January,” the FAO wrote. “Prices of all the commodity groups that compose the index registered gains, with oils increasing the most.”
“We saw from the second half of January, exchange rates, the weakening of the dollar coming into the picture,” Abbassian said. “We have an equity market that is doing quite well compared to the last months of 2011 and an energy market that is very unsettling.”
Spot prices for U.S. soybeans at ports near New Orleans rose 1.2 percent last month following a 5.2 percent jump in December on concern dry and hot weather in Argentina and southern Brazil will reduce harvests there. U.S. Gulf corn spot prices rose 1.8 percent last month after advancing 4.5 percent in December.
“We are right into a very unpredictable weather situation, almost everywhere, but primarily the cold wave in Europe and dry spells in South America,” Abbassian said.
The FAO’s cereal-price index climbed 2.3 percent to 222.7 points from 217.6 points a month earlier, the biggest gain for the gauge since April. Corn led the gains on concern about South American crop prospects, the UN agency wrote.
Edible Oils and Fats
The index of edible oils and fats rose 2.8 percent to 233.7 points, compared with 227.5 points in December. The sugar-price index tracked by the FAO climbed 2.3 percent to 334.3 points on “less than favorable” weather in Brazil, the biggest producer of the sweetener, the agency said.
The meat index rose less than 1 percent to 178.5 points from 177.6, as rising pigmeat prices more than made up for a decline in poultry costs. The dairy price gauge gained 2.5 percent to 206.8 points from 201.7 in December.
“Butter and cheese prices are behind this month’s strength, as prices of both skim and whole milk powder were steady or slightly down,” the FAO wrote. “Relatively low stocks of dairy products in the U.S. along with supply tightness in Oceania have sustained prices in the past two months.”
World cereal production rose an estimated 3.6 percent in 2011 to 2.33 billion metric tons, 4.6 million tons more than forecast in December, the FAO wrote in a separate report today.
The wheat harvest probably rose 6.3 percent from the 2010-11 estimate to a record 694.5 million tons, while production of rice, on a milled basis, is estimated to have climbed 3.1 percent to 481 million tons. Production of coarse grains, which includes corn and barley, may have climbed 2.3 percent to 1.15 million tons.