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© ReutersAn index of grain prices rose 3.6% last month to 195.8 points. That’s still below where the gauge was in October, and 19% below the year-earlier level
An index of 55 food items rose 2.6% to 208.1 points from a restated 202.9 in January

World food prices posted the biggest gain in 19 months in February on concern cold weather and drought in the US, the world's biggest exporter of wheat, and dryness in top-sugar producer Brazil will harm crops.

An index of 55 food items rose 2.6% to 208.1 points from a restated 202.9 in January, when it dropped to the lowest level since June 2012, the Rome-based United Nations' Food & Agriculture Organization said. The gauge is still down 2.1% from a year earlier.

The FAO's food index hasn't fully reflected lower prices of grain and oilseeds, where bigger crops are forecast to pad stockpiles by the end of the 2013-14 season, according the UN Corn futures fell 40% in Chicago last year on an outlook for record production.

There have been some areas of concern regarding wheat, there have been drought problems in Australia, there's also drought in the US central Plains, Concepcion Calpe, an economist at the FAO, said by phone from Rome on Thursday. There are other factors, for example what is happening in Ukraine and Russia.

Russian troops have taken control of the Crimea peninsula to the southeast of Ukraine's main grain-export ports. Crimea's parliament voted to become part of Russia, with a referendum planned on 16 March, according to a statement on its website. Ukraine is forecast to be the third-biggest corn exporter and sixth-biggest wheat shipper in 2013-14, according to the International Grains Council.

When the situation is very uncertain, like now, you can have prices going in any directions, Calpe said. Markets are nervous. What we'll probably see is an increase in volatility as uncertainty remains.

Grains

In a separate report today, the FAO lifted the outlook for global stocks of wheat, coarse grains and rice at the end of the 2013-14 season as it raised estimates for last year's production of the grains.

An index of grain prices rose 3.6% last month to 195.8 points. That's still below where the gauge was in October, and 19% below the year-earlier level.Last month's jump in grain prices was helped by concern about wheat crops in the US, the largest grower, according to the FAO. Temperatures below 0 degree Fahrenheit (minus 17.8 ºC) may have caused some winter kill damage in the US Plains, according to Commodity Weather Group. I would not be confident that we have reached the bottom, Calpe said. We still see the situation on the supply side as quite comfortable.

Top performers

Coffee, hogs, corn and sugar are the best performers on the S&P GSCI gauge of 24 commodities so far this year, after sliding last year. Palm oil prices rose last month due to concern about drought in Southeast Asia, while sugar gained on worries of damage due to dry weather in Brazil and forecasts for a potential production drop in India, the FAO said.

A gauge of sugar prices jumped 6.2% in February to 235.4 points, the first gain in four months. Parts of Brazil's sugarcane-growing regions had less than 40% of usual rainfall in the past 90 days, data from World Ag Weather shows.

Brazil is one of the major drivers for sugar, Calpe said. Whatever happens in Brazil has an impact, and also India came with a lower production forecast.The cooking oils index rose to 197.8 points from 188.6 in January, gaining 4.9%. Palm oil futures jumped 9.4% in Malaysia last month on concern reduced rainfall will hurt yields.Dairy costs tracked by the UN agency advanced 2.9%. The FAO meat price index slipped 0.3% in February.

Wheat output

The FAO forecast world wheat production will drop 1.7% this year on lower yields and area in Canada, which had a record high last year, and on countries that were formerly part of the Soviet Union, where yields are seen returning to average after high levels in 2013.

The overall reductions expected would more than offset the few, and less marked, increases that are foreseen this year, mainly in the EU, India and the United States, the FAO said in the report.

The UN agency lifted its estimate for 2013 global production of wheat, coarse grains and milled rice by 13.2 million metric tons to a record 2.515 billion tons