ROME (Reuters] – The U.N. Food Agency reported on Thursday that world food prices rose in January, and remained at near 10-year highs. This was mainly due to a rise in vegetable oils index.

Food and Agriculture Organization’s food price index (FAO), which measures the prices of most commodities traded globally, was at 135.7 points, up from a revised 134.1 point in December. This figure used to be 133.7.

Inflation has risen further as countries recover from the coronavirus epidemic. FAO warns that higher food costs have led to an increase in food prices and put vulnerable populations in those countries that rely on imports.

Rome-based FAO increased its global production of cereals in 2021 from the previous estimate at 2.791 trillion tonnes to 2.793 million tonnes. According to their cereal demand and supply outlook,

FAO announced that January’s vegetable oils index rose by 4.2% over the previous month to record levels. It was hampered by lower export availabilities, other supply-side restrictions, including labour shortages, and adverse weather.

Boubaker Ben-Belhassen of the FAO’s Markets and Trade Division stated that there is concern over “the impacts of these restrictions will not ease rapidly”.

FAO milk price index increased by 2.4%. This is its fifth consecutive monthly increase. Butter and skimmilk powder saw the largest gains.

FAO stated that only 0.1% of the index for cereals rose, while maize saw a 3.8% rise. The increase was caused by concerns over South America’s drought.

The large wheat harvests in Australia, Argentina and elsewhere led to a 3.1% drop in world wheat prices. [GRA/]

FAO reported that January saw an increase in meat prices, but that sugar posted a 3.1% decrease. This was due in part to favorable production prospects for major exporters India (and Thailand) in the month.

FAO said it raised its projection of global cereal production in 2021 because of larger-than-previously estimated wheat outputs in Argentina and Australia, along with slightly higher production estimates in Russia and Ukraine.

FAO stated that global wheat production is expected to grow in 2022 due to favorable weather conditions, but high input costs may deter an even larger expansion.

Global cereal use in the 2021/22 period was 1.6% higher than that of 2020/21, at 2.805 trillion tonnes. FAO forecasts that world cereal stocks will reach 824million tonnes by 2022, an increase of 2.2 million tonnes from November. It is slightly below their initial levels.