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Food
prices on the Food and Agriculture Organization's (FAO) index
have fallen for five straight years due to ample supply, a
slowing global economy and a strong U.S. dollar.
But in January, the index, which measures monthly price changes
for a basket of cereals, oilseeds, dairy products, meat and
sugar, averaged 173.8 points, a high not seen since February
2015.
The 2.1 percent monthly rise was driven by surges in sugar
quotations and export prices for cereals and vegetable oils.
FAO Senior Economist Abdolreza Abbassian said outside factors
including concerns about U.S. President Donald Trump's trade
policy in North America would probably contribute to more
volatility in food prices.
"Uncertainties are going to create problems for international
markets, in terms of where Mexico will source its corn, would
the current trend continue with its closest (trade) partner, the
United States," Abbassian said.
Relations between major grain exporters Russia and Ukraine could
also have an impact, he said, adding food prices overall were
likely to be broadly firmer but more volatile this year than in
2016.
A 9.9 percent rise in the price of sugar in January was driven
by expectations of protracted tightness in supplies from Brazil,
India and Thailand, a trend Abbassian said was likely to
continue.
FAO raised its forecast for global cereals output in 2016-17 to
2.592 billion tonnes, based primarily on larger-than-expected
wheat harvests in Australia and Russia.
(Reporting by Isla Binnie; editing by Jason Neely)
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