Global food prices rose once more in January, ending a sixth month downward trend. The UN Food and Agriculture Organisation today reported on its Food Price Index, which measures the price of a range of staples around the world. The FAO said that food prices were up two per cent compared to December’s levels.

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Senior Grains Economist Abdolreza Abbassian said, “There is no single narrative behind the food price rebound – different factors are at play in each of the commodity groups, but the increase, despite an expected record harvest and an improved stocks situation, and after six months of falling or stable prices, highlights the unpredictability prevailing in global food markets.”

He continued, “I can’t see that the usual suspects – the value of the dollar and oil prices – were  much involved in January. But one reason is poor weather currently affecting key growing regions like South America and Europe. It has played a role and remains a cause for concern.”

Cereal Prices rose 2.3 percent between December and January, with only rice prices remaining constant. FAO put the rises down to concerns over extreme weather conditions affecting a number of regions. Sugar prices were also up on weather concerns, rising 2.3 per cent, though they remain 20 per cent below their exorbitant levels of January 2011.

Oils and Fats rose 3 percent over the period, largely due to a seasonal decline in palm oil production. Meat prices only rose by half a per cent, with pig meat rising by the highest amount (2.6 per cent). Dairy prices were 2.6 per cent higher.

Although prices rose, reflecting concerns over weather, FAO figures show that world cereal production forecasts are up. Forecasts show cereal production for 2011 is expected to be more than sufficient to cover anticipated demand in 2011/12. Production is expected to reach 2,327 million tonnes, a 4.6 million tonne increase from the last estimate in December. If forecasts are realised this would be a new record.

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