By Agri-Pulse Staff

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, March 3 - With export prices of major grains up at least 70% from February 2010, “Unexpected oil price spikes could further exacerbate an already precarious situation in food markets.” That warning comes from David Hallam, Director of the United Nations' Food and Agriculture Organization (FAO) Trade and Market Division.

Hallam's warning is based on the FAO's global Food Price Index which was updated March 3 and shows:

  • * “The FAO Food Price Index averaged 236 points in February, up 2.2 percent from January, the highest record in real and nominal terms, since FAO started monitoring prices in 1990.”

  • * “The Cereal Price Index, which includes prices of main food staples such as wheat, rice and maize, rose by 3.7 percent in February (254 points), the highest level since July 2008.”

  • * “The FAO Dairy Price Index averaged 230 points in February, up 4 percent from January, but well below its peak in November 2007.”

  • * “The FAO Oils/Fats Price Index rose marginally to 279 points in February, a level just below the peak recorded in June 2008.”

  • * “The FAO Meat Price Index averaged 169 points in February, up 2 percent from January. By contrast, the FAO Sugar Price Index averaged 418 points in February, slightly below the previous month but still 16 percent higher than February 2010.”

FAO forecasts “generally favorable” winter grain production in the northern hemisphere and expects global wheat production up some 3% for 2011 based on improved wheat production in Russia and former Soviet Union countries. FAO sees 2010 world grain production up 8 million metric tons from December expectations but still slightly below 2009. The March 3 FAO world cereal market forecast show 2010/11 production at 2,237 million metric tons, up 8 million from December's 2,229 forecast but well below last year's 2,263 level. This month's upward revision reflects mostly higher estimates for production in Argentina, China and Ethiopia.

Meanwhile, FAO's forecast for world grain utilization in 2010/11 has been revised up by 18 million metric tons since December. Utilization is put at 2,278 million, up from December's 2,260 and 42 million metric tons above last year's 2,236 figure. The bulk of the revision reflects adjustments to the feed and industrial utilization of coarse grains. Larger use of corn for ethanol production in the United States and statistical adjustments to China's historical (since 2006/07) supply and demand balance for corn are the main reasons for the revision.

For more FAO details, go to the FAO web site HERE.

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