World Food Prices Push to New High in February

World food prices reached a new record high in February, the Food and Agriculture Organization of the United Nations (FAO) said Friday.

The FAO food index averaged 140.7 points in February, up 3.9% from January, 24.1% above a year earlier, and 3.1 points higher than the previous high reached in February 2011. (The Index tracks monthly changes in the international prices of commonly-traded food commodities).

Vegetable oils were a primary contributor to the overall increase in February, with the oils price Index jumping 8.5% from the previous month to reach a new record high, mostly driven by increased quotations for palm, soy and sunflower oils. The sharp increase in the vegetable price index was principally driven by sustained global import demand, which coincided with a few supply-side factors, including reduced export availabilities of palm oil from Indonesia, the world’s leading exporter, lower soybean production prospects in South America, and concerns about lower sunflower oil exports due to disruptions in the Black Sea region, the FAO said.

The FAO cereal price index increased 3% from the previous month, led by rising quotations for coarse grains, with international corn prices up 5.1%, due to a combination of continued concerns over crop conditions in South America, uncertainty about exports from Ukraine, and rising wheat export prices. World wheat prices increased by 2.1% in February, largely reflecting uncertainty about global supply flows from Black Sea ports.

Geopolitical tensions were rising in the Black Sea region during February, but it was not until late in the month that Russia unleashed a full scale invasion of Ukraine, a major global player in corn, wheat and sunflower oil exports. This week alone, the benchmark Chicago wheat market gained more than 30% on fears of widespread shortages in the wake of the closure of Ukraine shipping ports. Corn and soybeans have also moved sharply higher this week.