Global food prices hit an all-time high last month, up 3.9% from January and 24.1% from a year ago, according to the UN Food and Agriculture Organization, and Russia's invasion of Ukraine was just getting started.
"There is no end in sight to the upswing because 30% of the world's wheat exports have been cut off from the global market by the war," although some countries are starting to cut back on their export purchasing due to the high prices, Commerzbank said.
Corn (C_1:COM) rose to its highest since September 2012 at $7.82 1/2 per bushel before settling at $7.54 1/4 a bushel; soybeans (S_1:COM), which gave up early gains to close slightly lower at $16.60 1/2 per bushel, are less exposed to trade in Russia and the Ukraine but they still face upward pressure from weather developments in South America.
The United Nations group's vegetable oil index surged 15.8% in February, reflecting rising prices for palm, soybean and sunflower oil; dairy prices rose 8.5% from January, and corn gained 5.1%.
Also, the UN raised its estimate for global grains trade by 2.7M tons, highlighting that demand already was running hot - exacerbated by unfavorable crop weather as well as an energy crunch and expensive fertilizers - before the Ukraine war curtailed supplies.
Crop conditions and adequate export availability explain only part of the sharp global food price increases, the FAO report said, as a "much bigger push for food price inflation comes from outside food production, particularly the energy, fertilizer and feed sectors."
University of Illinois agricultural economist Scott Irwin said this week that the current chaos out of the Black Sea area will be "the biggest supply shock to global grain markets in my lifetime."