After holding steady for a month in August, world food prices once again began a steady climb in September, as harvest efforts began in the world’s bread baskets and the effects of extreme weather around the world were made known.

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Food prices, especially for cereals, rose to all-time highs in July as concern about the effects of drought in the United States and the Black Sea region in particular sparked grain rallies. However, in August prices remained stable. However, according to the UN Food and Agriculture Organisation, prices rose again in September.

The FAO Food Price Index, released on Thursday (4^th October), which measures the price of a range of stable foodstuffs around the world, revealed prices rose 1.4 percent over September. Whilst cereals contributed to the rise last month, the main driver was meat and dairy prices.

Since August, the FAO Cereal Price Index has risen by one percent. Although maize prices fell after the dramatic rises seen over the summer, wheat and rice prices rose, offsetting the decline.

Reduced availability of maize and now more prominently wheat are potentially a cause for concern, FAO analysts said. Nevertheless, having risen during the first half of the month, international wheat prices fell in recent weeks, following Russia’s announcement that it would not impose restrictions on exports.

Meat prices rise on increased feed costs

While there is still concern over the potential for volatility in cereal prices, efforts by FAO and other anti-poverty organisations to avoid dramatic rises by pointing out that production remains at near record levels overall and working with national governments to tackle the growing situation appear to have helped assuage the situation somewhat.

Although worldwide cereal production is forecast to fall below 2011’s apogee, record harvests are expected in Low-Income Food-Deficit Countries. World cereal production in 2012 is now forecast at 2,286 million tonnes, slightly down from the  2,295 million tonnes estimated in September and 2.6 percent below last year’s production levels.

In response to the situation in the grain markets, meat prices have risen 2.1 percent since august as a knock-on effect of earlier increases in grain prices; farmers have expressed concerns that rising feed costs will eat into their margins.

Over September, the grain-intensive pig and poultry sectors recorded particularly strong price gains, with prices increasing by 6 percent and 2 percent respectively. The dairy sector saw similar rises; increasing feed costs and higher demand led to a dramatic 7 percent increase in the price of dairy products.



Although this adverse weather, which struck many of the world’s breadbaskets over the summer, is expected to lead to a decline in global cereal stocks by 2013, FAO said very early indications for wheat crops in 2013 are encouraging, with winter wheat planting in the northern hemisphere already well advanced under generally favourable weather conditions.

Nevertheless, although production is improving overall and prices of staple grains are generally easing, the UN’s Crop Prospects and Food Situation report, also released this month, listed 35 countries, 28 of them in Africa, as being affected by food insecurity and requiring external assistance for food.

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