World food prices rocket 20.7% to record high in Feb with Ukraine war just starting

The Food and Agriculture Organisation's food price index rose 3.9 per cent from January. PHOTO: LIANHE ZAOBAO

SINGAPORE (REUTERS) - World food prices hit a record high in February, jumping 20.7 per cent from a year earlier, led by a surge in the costs of vegetable oils and dairy products, the UN food agency said.

The Food and Agriculture Organisation's (FAO) food price index, which tracks the most globally traded food commodities, rose 3.9 per cent from January.

The data was compiled before war broke out in Ukraine which has pushed commodity prices higher still.

Russia and Ukraine account for about 29 per cent of global wheat exports, 19 per cent of corn exports and 80 per cent of exports of sunflower oil, which competes with soy oil.

In its report, the FAO said the February price increases can partly be blamed on crop conditions and reduced export availability. However, increases in other commodity costs also played a role.

"A much bigger push for food price inflation comes from outside food production, particularly the energy, fertiliser and feed sectors," said FAO economist Upali Galketi Aratchilage.

"All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production."

The escalating war in Ukraine keeps pushing commodity prices higher.

On Monday, wheat futures rose more than 5 per cent, hitting a 14-year high. Corn rose 2.8 per cent while soybeans gained more than 1.5 per cent.

The wheat market jumped more than 40 per cent last week, its biggest weekly rise on record.

With Ukrainian ports closed and operators reluctant to trade Russian wheat in the face of Western financial sanctions, buyers are trying to find alternative suppliers.

Louis Dreyfus, one of the world's largest agricultural commodity merchants, said it had suspended operations in Russia.

Export demand for wheat from the European Union surged this week and is expected to continue as fighting disrupts shipments from Ukraine and Russia, traders said on Friday.

Follow The Straits Times' live coverage on the Ukraine crisis here.

Remote video URL

Join ST's Telegram channel and get the latest breaking news delivered to you.