In October, global food commodity prices reached their highest levels in 18 months, primarily driven by a significant increase in vegetable oil prices, as reported by the Food and Agriculture Organization (FAO) of the United Nations. The FAO Food Price Index, which reflects monthly changes in internationally-traded food commodities, averaged 127.4 points in October, a 2% rise from September and a 5.5% increase from October 2023. Despite this climb, the index remains 20.5% below its March 2022 peak, highlighting both recent increases and ongoing market volatility.
Surge in Vegetable Oil Prices
The FAO Vegetable Oil Price Index surged by 7.3% in October, reaching a two-year high. This significant increase is due to rising prices of palm, soy, sunflower, and rapeseed oils, with concerns about production disruptions being a key factor. Such spikes reflect broader anxieties about supply stability and the growing demand for these essential oils in both food and industrial sectors.
Rising Cereal Costs
Global cereal prices also saw an uptick, with the FAO Cereal Price Index up 0.9% in October. Wheat prices, in particular, were affected by adverse weather conditions in key producing regions in the northern hemisphere, coupled with re-imposed pricing floors in Russia and increased tensions around the Black Sea. Maize prices also increased, influenced by strong domestic demand and logistical challenges in Brazil due to low river levels. However, not all cereals followed the upward trend; rice prices decreased by 5.6%, as India’s removal of export restrictions on non-broken rice sparked expectations of increased competition among exporters.
Sugar and Dairy Prices on the Rise
The FAO Sugar Price Index rose by 2.6% in October. Ongoing concerns about Brazil’s 2024/25 sugar output, following prolonged dry conditions, were compounded by rising global crude oil prices, which shifted more sugarcane production toward ethanol. Meanwhile, a weakening Brazilian real against the U.S. dollar somewhat restrained further price hikes. The FAO Dairy Price Index also climbed, up by 1.9% due to higher international prices for cheese and butter, although milk powder quotations declined.
Meat Prices Show Mixed Trends
The FAO Meat Price Index displayed varied trends in October, with an overall decline of 0.3% from September. Pig meat prices dropped due to increased slaughter rates in Western Europe amid subdued demand, while poultry prices edged down slightly. However, bovine meat prices rose moderately, supported by stronger international demand, whereas ovine meat prices held steady.
Global Cereal Production Forecast
In the FAO’s latest Cereal Supply and Demand Brief, global cereal production for 2024 is expected to decrease by 0.4% to 2,848 million tonnes, marking the second-largest harvest on record. Wheat production is predicted to increase due to favorable weather and expanded cultivation in Asia, counterbalancing declines in Europe. Conversely, coarse grain production, particularly maize, is anticipated to decline due to adverse weather. Despite these shifts, world rice output could reach a record high of 538.9 million tonnes, driven by record-breaking plantings.
Global cereal utilization is expected to rise by 0.5%, reaching 2,857 million tonnes, supported by increased food use of rice and wheat. Cereal stocks are also projected to grow by 0.6% to 889 million tonnes, with rice inventories leading the expansion. However, international cereal trade is forecast to contract by 3.9%, impacted by declines in wheat and coarse grain exports, though rice trade is expected to rise.
This FAO report highlights both the pressures and resilience within global food markets amid fluctuating production and demand.
