World food prices set new record high: ETFs to use

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The U.N. says that world food prices rose to a new record in February and grain costs may continue to rise in the next several months. Only rice is keeping the world from a repeat of the crisis three years ago.

The UN’s Food and Agriculture Organization said today that an index of 55 food commodities   rose 2.2% to 236 points from 230.7 in January. This is the 8th consecutive gain.

Wheat rose as much as 58 percent on the Chicago Board of Trade in the past 12 months, corn gained 87 percent and rice added 6.5 percent.

Bloomberg: "Rising food costs contributed to riots across North Africa and the Middle East in the last several months that toppled leaders in Egypt and Tunisia. Prices surged as bad weather ruined crops from Canada to Australia and Russia banned grain exports after its worst drought in a half century".

The FAO forecasts that food production will have to climb by 70 percent between 2010 and 2050 as the world population expands to 9 billion and rising incomes boost meat and dairy consumption.

The UN’s food-price index rose from 176 points from a year earlier, with all five food groups advancing. The dairy index climbed to 230 points in February from 221.3 in January.
Milk futures traded in Chicago jumped 15 percent last month following a 26 percent surge in January, the biggest monthly gain since March 2004. Whole-milk powder prices rose to a record in its biweekly auction, Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, said March 1.

The FAO’s sugar-price index slipped to 418 points from a record 420.2 points in the previous month. The UN agency’s index is trade-weighted, with the sweetener accounting for 7 percent. Raw-sugar prices climbed 37 percent in New York in the past year.
 
The gauge for meat, which makes up 35 percent of the overall index, rose to 169 points from 165.9 points. Meat is a “significant” part of the diet in developed countries, which may see more inflation from food than in 2007-08, according to Ken Ash trade and agriculture director at the OECD.

A gauge of cooking oils and fats gained to 279 points from 277.7, the FAO said. Its cereal-price index climbed to 254 points from 244.8 in January, below the peak level of 274.3 in April 2008, the report showed".

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