The FAO Food Price Index rose sharply in March, equating to a 2.3 percent rise in the price of a basket of staple foods around the world. Food prices are currently at their highest level since May 2013. The rises follow on from a 2.6 percent rise in February.

"The Index was influenced, as expected, by unfavourable weather conditions in the US and Brazil and geopolitical tensions in the Black Sea region," said Abdolreza Abbassian, FAO Senior Economist.

Abbassian suggested the situation could ease this month, adding, "The Food Price Index looks at March trends. Since then, the initial fear over disruptions in grain shipments from Ukraine has subsided. Also, markets have started to discard any negative impacts that the current difficult domestic economic conditions may bear on plantings or harvests in 2014,"

Prices rose for all food groups assessed by the index, save for dairy, which fell for the first time in four months (-2.5 percent). The greatest gains were seen in sugar (+7.9 percent) and cereals (+5.2 percent).

Wheat and maize prices surged and imports were strong amid concerns over the effects of dry weather conditions on winter wheat in the United States, unfavourable weather in Brazil, and tensions in the Black Sea region.

While in March the Cereals Index rose to its highest value since August 2013, it remained well below (14.4 percent) its value in March 2013. Rice prices were generally stable.

Oil prices were up due to dry weather in Asia, which has led o a surge in the price of palm oil.  Dairy prices dipped as a result of slackening demand around the world and healthy production levels in New Zealand. Dry weather in Australia combined with dryness and disease fears in the US led meat prices to edge higher.

Early outlook for cereal crops in 2014

"It is still too early to make accurate production forecasts for cereals, as many crops have yet to be planted and weather remains the key factor influencing harvests," said FAO's Abbassian.

World wheat production in 2014 is forecast at 702 million tonnes, down 2 million tonnes from FAO's first forecast published in March. Going by current estimates, production would be 2 percent lower than last year's record harvest.

Even though the outlook for rice is up slightly, increases might not be sufficient to match population growth, FAO said. As a result, inventories in the next season could see a decline, albeit from very high levels.