The Wall Street Journal reports that Food Prices Reach Record High.
(emphasis mine) [my comment]
MARCH 4, 2011
Food Prices Reach Record High
By CAROLINE HENSHAW
LONDON—World food prices rose 2.2% in February from the previous month to a record peak, the United Nations' food body said Thursday, as it warned that volatility in oil markets could push prices even higher.
[Since the 2010 food crisis last June, food prices have been going strait up.]
The Food and Agriculture Organization price index rose by 2.2%—the eighth consecutive rise since June—to an average of 236 points last month, the highest record in real and nominal terms since the agency started monitoring prices in 1990.
Global cereal supplies are also expected to tighten sharply this year due low stock levels, the FAO said. The body raised its estimate for world cereal production in 2010 by eight million metric tons from its December estimate to 2.2 billion tons but said it expects that to be outpaced by an 18 million-ton increase in world consumption.
With global food prices rising to a record, Myanmar has halted rice exports to try to keep local prices in check. WSJ's Jake Lee and Asia Heard on the Street Editor Mohammed Hadi discuss how Asian countries are coping.
International export prices of major grains are already more than 70% higher than this time last year after a succession of weather problems in key producers slashed hopes for the world harvest. The FAO's cereal-price index, which includes prices of main food staples such as wheat, rice and corn, rose by 3.7% to 254 points.
Mr. Abbassian said the increase in oil prices has made planting crops such as corn more attractive as they can be converted into fuel substitute ethanol, taking away crucial acreage from crops like wheat next season. The FAO predicts wheat production will rise by about 3% in 2011, broadly in line with other organizations, but Mr. Abbassian said a minimum increase of 3.5% is needed to ensure sufficient output.
"With oil prices rising, it could encourage a bigger corn crop at the expense of other crops," he said. The FAO's price index for oils and fats rose marginally to 279 points in February, just below the peak recorded in June 2008.
Food-price inflation has already been blamed for contributing to a wave of unrest in the Arab world that has unseated the long-standing presidents of Tunisia and Egypt and left thousands dead on Libya's streets amid a brutal government crackdown. Of all the commodities groups monitored by the FAO, which include cereals, dairy, meat and oils, only sugar dipped last month to 418 points, slightly below the previous month but still 16% higher than February 2010.
My reaction: Food prices reach record high, once again.
1) World food prices rose 2.2% in February from the previous month to a new record peak in both real and nominal terms.
2) This is the eighth consecutive rise since June last year (when the 2010 food crisis began).
3) With global food prices rising to a record, countries like Myanmar are halting exports to try to keep local prices in check, which drives prices up even more for the rest of the world.
4) International export prices of major grains are already more than 70% higher than this time last year
5) The increase in oil prices has made planting crops such as corn more attractive (because of ethanol demand), taking away crucial acreage from crops like wheat next season.
6) Food-price inflation is a primary driving factor behind the wave of unrest in the Arab world.