Food Prices Hit New All Time Record In February

Tyler Durden's picture

When two months ago, in the first week of January, we observed that the U.N. Food and Agriculture Organisation's Food Price Index had hit a record we said: "The last time food prices hit ridiculous levels, the immediate outcome
was global food riots in places such as Haiti and Bangladesh. Which is
why distributors of riot equipment in the world's poorest countries may
be in for a bumper crop
as the Food and Agriculture Organization has
just announced that world food prices have just surpassed the previous
record last seen in 2007-2008." Little did we know just how prophetic this statement would turn out to be. Well, the FAO has just released its latest food price update and as expected, it is a new all time high. The U.N. Food and Agriculture Organisation's Food Price Index hit its second straight record last month, further passing peaks seen in 2008 when prices sparked riots in several countries, driven by rising grain costs and tighter supply." And with oil now joining food, which means that the inflationary vicious spiral is now on, it is only a matter of time before ever more hungry countries join the wave of revolutions, now that Tunisia and Egypt have shown it can be done. On the other hand, our expectation is that the IMF will promptly seek to put out any fires before they become infernos, with the US taxpayer reeling from the double whammy of Bernanke's inflationary policy consequences: once at home, and once by subsidizing foreigners.

Reuters with an interactive chart of food prices.

And some more from Reuters:

Oil prices recently hit 2-1/2 year highs, nearing records set in 2008, with markets spooked on concern that North African and Middle East unrest would choke key supplies.

Farmers depend on fuel to run agricultural machinery, while dry bulk shippers are heavy oil users, costs which are passed on to food buyers.

Spiraling shipping costs for commodities threaten to drive food inflation even higher as nations from Asia to the Middle East and Africa scramble for supplies, analysts say.

Stockpiling by some major grain importers "beyond country's normal needs" seeking to head off political unrest and secure supplies on domestic markets, has been adding uncertainty and volatility to the markets, Abbassian said.

"Political instability in the regions and countries affects the markets by adding uncertainty: will a country buy or not buy, why it had bought so much now ... those things are disruptive to the normal trade," he said.

The FAO, which measures monthly price changes for a food basket composed of cereals, oilseeds, dairy, meat and sugar, averaged 236 points in February, the record in real and nominal terms, up 2.2 percent from January's record and rising for the eighth month in a row.

Additionally, heavy stockpiling, as has been the case recently, will likely exacerbate matters even futher:

Bigger grain stocks now than in 2007/2008 are serving as a buffer to prevent the rerun of the food crisis, but the FAO has been concerned about the heavy use of stocks, Abbassian said.

FAO said in Thursday's statement it expected a tightening of the global cereal supply and demand balance in 2010/11.

"In the face of growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains, " the agency said.

In this geopolitcally uncertain environment, the two key variables remain Saudi Arabia and China. And while China continues to depress the fair value of rice as we disclosed previously, most likely through political channels that ultimately feed into commercial CFTC speculator trading desks, thus keeping the situation modestly under control, the Saudi-Bahrain connection remains tenuous. In fact, today Bahrain may steal the spotlight, after the opposition not only called for a removal of the government, but has announced a mass protest for Friday.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
grunk's picture

Step One - BTFD - Buy the fucking dip.

Step Two - ETFD - Eat the fucking dip.

StychoKiller's picture

Ever notice that no store EVER puts up signs saying:

"New Higher Price!"

"Now with less contents!"

"Same size, Crappier Ingredients!"

Truth in advertising, bah! :>(


sulfur's picture

must be that financial terrorist pushing up the prices :)

MarketTruth's picture

Food Inflation Ahead!

Price hikes in light speed is too slow! 

Prepare for price hikes in (Spaceballs) ludicrous speed!

Pegasus Muse's picture

"must be that financial terrorist pushing up the prices :)" 

Now that you mention it .... ---

“A JPMorgan Chase & Co. unit took delivery of almost 1 million metric tons of raw sugar, the most for the commodity since 2009, to settle the expiring March futures contract in New York. JPMorgan Futures accepted delivery on 18,748 sugar contracts, or the equivalent of 952,398 tons, ICE Futures U.S. said yesterday on its website. That represents 9.2 percent of the current year’s U.S. consumption as estimated by the government. Prices climbed to the highest level in almost three weeks in New York trading today.” 

Josh Randall's picture

This is what happens when there is snow all over the place

MarketTruth's picture

Blame it on global warming. Oops, i mean 'climate change' and then start a climate change commission and demand taxes from everyone due to the weather having the ability to change.

max2205's picture

I don't read UN "reports" might as well read CIA bullshit..

eigenvalue's picture

You can't eat food. It is a barbaric relic...

UGrev's picture

No, but Al says you can use it as fuel!! GO AL!

UGrev's picture

I think Al just junked me..lawl!

Cash_is_Trash's picture

But, but... a McRib doesn't pay any dividends!

StychoKiller's picture

Soon, it'll be cheaper to eat other humans!  Mmmm, Mac's Ribs. :>D

Pants McPants's picture

Whew.  Good thing there is no inflation...and citizens don't want to buy gold.

On a serious note - and this has been discussed on other threads in this forum - I'm beginning to notice the stealth price increases on more products at the supermarket.  One example: mini dill pickles.  I buy the largest Mt. Olive jars available, and the price is usually between $5.50 and $6.00/jar.  In the past three weeks, the price has remained the same....but the pickles are larger.  Whereas before I could stretch one jar over five days (I love pickles, leave me alone) now it takes ~1.5 jars to cover the same five days.

ColonelCooper's picture

Don't eat a whole pickle.  Just kidding.  Start drinking the brine and like it.

MsCreant's picture

Ben inflated your pickle! Dastardly deed indeed! :-)

At least they are a low carb, low calorie indulgence.

There is nothing stealthy about what I am noticing. The price that used to be the regular price on some meats I buy is now the "sale" price.

I have a sausage patty I love for my family. They put them on sale and I loaded up the freezer. I looked at them 2 weeks later, they have gone up $1 a pound!!!

cossack55's picture


Head of Iceberg lettuce $1.48    .98 three weeks ago

Green bell pepper  $1.24          .68  three weeks ago

Coke/Pepsi    who cares, the HFCS will kill you or the aspartame (thanks donny rumsfeld)

mick_richfield's picture

Man, I been reading too many ZH stories.  When you mentioned HFCS, I automatically translated that as High Frequency Carbonation Something.


Fed delenda est.

Eager learner's picture

Grow your own dude. Might not look as good but somehow it always tastes better.

DaveyJones's picture

Mine looks pretty good and I grew through the winter this year for the first time (lettuce, raddish, spinach, kale, cabbage, mustards, arugula, broccoli, chard, carrot). Greenhouse facing south. With one winter cloth over the plant when it hit 25 or lower.  I know I've posted this before but Elliot Coleman, Four Season Harvest is a great work.

Magnum's picture

March is a notorious month for spikes in lettuce prices, it has been that way for years.  Production shift from Yuma to Salinas.  Prices usually plummet by May.

Magic Mamaliga's picture

Lettuce and peppers are expensive because of COLD WEATHER in Mexico.  North Mex had snow last week and sub zero temps for half the nights of the previous 2 weeks.  I work for a produce brokerage.  Cold weather in CALI didn't help either.  Example... 1 month ago, lettuce was 15.00/box now about 35.00/box.  Peppers are 40 to 50 / box depending on size, quality, type compared to about 25-30 1 month ago...

Speculation died in produce with the recession... wholesalers don't buy produce with the notion that "someone will buy it" anymore.  This was common practice in the past with strong demand but has become risky for wholesalers to do under current conditions.  Only that which buyers are lined up for is purchased, if it can be found.

As a broker being in contact with other brokers daily, it's evident that volumes have suffered since the recession and have yet to recuperate to pre-recession levels.  I guess people are eating less fruits & veggies to save for the new iPad.  Final Utility my ass...

DaveyJones's picture

aspartame is Donny's most dastardly deed.  

Weisbrot's picture

is that the same asparatame that acts a drug delivery-bio weapons delivery system?

docj's picture

Absolutely, McPants.  Good thing Uncle Sugar keeps telling us inflation is "under control" (but who's control???) lest the sheeple might start to turn off Survivor: Redemption long enough to realize they're broke.

Can't have that now, can we.

Gas at my local station this morning: $3.47 - it was $3.09 a month ago.

apberusdisvet's picture

Do you also have a craving for ice cream?  Did the rabbit die?

ivars's picture

Well presented and timely information,as always. The essence is brought out clearly. So which oil supplying or potential oil/gas investment country goes next?


So that Oil can continue to fluctuate with upwards trend until it breaks the neck of recovery ( July 2011)? This is how it may look, based on system response to large shocks ( in this case, 2008 Lehman- 2009 March financial squeeze and stock crash ) :


These Graphs were made on February 6th, so far looking good, both stokc and oil price development predictions.











PY-129-20's picture

There is a saying in German: "Die Kacke ist am Dampfen!" I guess the best translation would be something like this "when the shit hits the fan". That's big news. Three months ago, I thought that at this point in time, things in the FPI would improve. YIKES!

weinerdog43's picture

"Die Kacke ist am Dampfen!"

That's a keeper.  Thanks!

pods's picture

I second that!  On a sticky note.

I just wonder how much longer before the Kacke really hits the Dampfen?



Josephine29's picture

I reading about this earlier on a blog post looking at the possible effects of Ben Bernake's policies beyond his new "rule of thumb" for Quantitative Easing.

With the surge in commodity and food prices that has taken place since the beginning of QE 2 I wish I had established benchmarks for commodity and food prices back then. However that does not stop me from looking at what they would have been!.......

If we think of those poor souls who are struggling to feed themselves in North Africa the CRB food component has risen from 420 to 495.81 for a rise of 18%.


I liked his other comment that if he was Ben he would be struggling to sleep at night!

cossack55's picture

Thats no problem for Rudolf von Bernankenstein, he just rolls around in the tungsten at Ft. Knox till he is exhausted and dreams the dreams of the undead.

spanish inquisition's picture

V Fib shaped recovery - right on track

Next stop. Paddles made in Iceland or flatline.

lbrecken's picture

    so i wake up and was about to east some mini wheats
    i happen to stumble upon a box i bought a few months back .....
    it was 18 oz
    the NEW box i just bought for same price was 15.8 oz
    thats a 10% increase in price!

tmosley's picture

Spalding told me bread was 75 cents a loaf!  

ak_khanna's picture

The only thing driving up commodity prices worldwide are speculators armed with cheap money provided by central bankers and super fast computers. This is causing a havoc in the lives of rest of the population and pushing them towards poverty as they can no longer afford the basic necessities of life.

Regulators are either hand in glove with the banksters or are too slow to react and take ages to identify and take measures to solve the problems.

Total ban on speculation and the reinforcement of Glass Steagall Act is strictly required to bring relief to the man on the street.

tmosley's picture

What is it with you and Glass Steagall?  The ONLY thing that is going to stop inflation is for central banks to stop printing money.  You don't need a bunch of regulations, you need to follow the constitution.

Trying to regulate speculation in an environment of money printing is like trying to stop an in ground pool from flooding while pouring water in by building a coffer dam.  The dam has to get higher and higher to stop the water from flowing over the top IF your regulations (the height of the dam) can keep up with the incoming water, and the effect from itself compressing the ever increasing mass of water into a smaller and smaller area.  Eventually, the dam will fail, and the disaster will be much worse.  

SilverDOG's picture

Look beyond what you are told, as your justification of events unfolding is by actions of the pawns. Who's zooming who. 

Milton Waddams's picture

Food is such an overrated staple item as it is... Ever seen the Jetsons???

Oh regional Indian's picture

Food and PM's in lock-step. Guess we all know what is going to keep food on the table.

Another thing to remember, all this snow this winter will come down as mlet as it warms up.

Ergo, massive flooding this winter in various downhill and down river places. Count on it. Here in India, snow still falling on the Himalayas. 

That will destroy standing crops and screw with transpostation.

We should prepare accordingly.


Eager learner's picture

Farmers depend on fuel to run agricultural machinery, while dry bulk shippers are heavy oil users, costs which are passed on to food buyers.

Don’t forget Fertiliser comes from oil. Oil hikes hit all the way up the food production chain.

naughtius maximus's picture

Acutally fertilizer come primarily from natural gas. But Pesticides, yes those are oil based. Pestilence bitchez!

onlinepandorajewellery's picture

A proven way links of London is unquestionably utter with regards to Links of Londonholidays plus its trouble-free to help you lose interest in of which usually favorable beautification can potentially without doubt do reasonable ability that will support beautification even if enclosed any specific empty reason. Can be obtained to build adorableness Beautification indoors Links of London.friendship bracelet Links of london will be absolute meant for holiday seasons, ideal adventures, and as well, for good always remember, celebration activities. Imparting a number of cost-free this includes the particular Sweetener Stick Well look and feel Wedding band of the actual children couple and / or son internet affiliate reveals that the woman bethink this kind of essential interacting with and also shows your main nasty adulation birthday different.Brand-new whenever you want considered precisely why are located customers arrangement wedding included rings? Genuinely, cheap Links of Londonthere have been completely abounding affidavit that will rings were consequently accepted in Links london ???¡ì?C boilerplate historical past. To illustrate, to get apperceive which a diamond ring will be Suscrose Wandering cling Believe Gemstone acceptable within the of pre-engagements?Links London charms Just what creates this change important beggarly often?Application nearly home business a new families adulation a special feature and wish to execute but aren't you can get for any fully-fledged task. For illustration Links of London- Suscrose Stick Genuinely look and feel Nuptial ring, this specific varied gemstone could be generously sufficient to put on.Links of London bracelet The massive business pattern for the own personal unquestionably sense clearly. Nice looking all around for the exact purpose of day furthermore suffering from consideration towards event days, catch the attention of assimilation through Fine Walks keep.The texture reputation and appearance are often well informed any moment finding jewelry piecies. Girls that are actually had basically buy fresher jewelry piecies which can be in no way authentic all downhill will often achieve all the way " up " in a derma eradicate,Links of London charms occurrences, apparel, real estate, including. forebears Links of london stuff reach a decision to very much discover currently being larger than the actual ones. Links of London could well be some sort of geared up coordinator regarding addition possibly even jewels.When evaluating jewellery,Links of London cufflinks the majority of us recognition just one shop untreated when using the ideal Links of London For this particular 12 months ! brand-new arrivals diet regime with respect to physical aspect necklaces, swear rings, relationship partner your life rings, and holy marriage bandz, appearance earrings, beauty necklaces. In case you doubtlessly adulation which will Sugar Jogging adhere Practical knowledge Contact, Links of London saleyield campaigns and find visitors hoop that you really would just like so as to turned out to be given of course.