By Jane Byrne , 01-Sep-2010

The FAO has revised downward its forecast for 2010 world wheat production levels and reports that wheat market dynamics drove international food prices up in August by 5 per cent – the biggest month-on-month increase since November 2009.

The latest revision in wheat production forecasts reflects a further cut in the estimates for this year’s harvest in the Russian Federation from 48 to 43 million tonnes (mt) in August, stated the UN’s Food and Agriculture Organisation (FAO), in its latest update on the global cereals supply and demand situation.

The international organisation said that the surge in its Food Price Index (FFPI), which is measure of the monthly change in international prices of a basket of food commodities, was informed by the sudden sharp rise in international wheat prices following drought in the Russian Federation and the country’s subsequent restrictions on wheat sales.

“But other drivers included higher sugar and oilseed prices,” noted the FAO report.

Comparative analysis

But the international organisation cautions that the FAO Food Price Index (FFPI), though it peaked last month to an average of 176 points, is still 38 per cent down from the highs of June 2008. More