MILAN, ITALY - Scorching heat in the U.S. Midwest is expected to lead to a rise in global food prices, ending three months of declines, the United Nations said yesterday, with some international grain prices already rising to highs last recorded during the 2007-2008 food crisis, Reuters reports.
"We do not rule out further price increases and more price volatility until U.S. harvests. The next couple of months are going to be quite bumpy," said Abdolreza Abbassian, the UN Food and Agriculture Organization's (FAO) senior economist and grain analyst.
Soybean prices are at their highest levels since 2008 while U.S. wheat prices reached its highest price in more than a year, following cornï¿½ï¿½s rally.
"Corn is such a driver now in terms of market sentiment ï¿½" for at least a few weeks if not months ï¿½" anything that goes wrong beyond what the market has anticipated would certainly create a turmoil in the market, " Abbassian said.
Food security last made global news after record high food prices in February 2011 contributed to Arab Spring protests in the Middle East and North Africa.
The FAO cut its 2012 world cereals output forecast and its estimate of global grain stocks for crop seasons ending in 2013.
The FAO does not expect any major problems with global food supplies in 2012-13, due to high rice and wheat supplies and lower demands from food, feed and biofuels industries due to the global economic slowdown, Abbassian said.
The FAO Food Price Index measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar. It averaged 201 points in June, down from a revised 205 points in May and the lowest level since September 2010, the FAO said.