Global food prices surged in September, experiencing the sharpest increase in 18 months, according to the Food and Agriculture Organization (FAO) of the United Nations. The FAO Food Price Index, which tracks monthly changes in internationally traded food commodities, averaged 124.4 points for the month. This reflects a 3% increase from August and a 2.1% rise compared to the same time last year.
The FAO Sugar Price Index saw the sharpest increase, rising by 10.4%. The price surge was driven by unfavorable crop forecasts in Brazil and concerns about India’s decision to divert more sugarcane toward ethanol production, potentially reducing the country’s sugar export volumes.
Cereal prices increased by 3%, mainly due to higher export prices for wheat and maize. The rise in wheat prices was caused by bad weather, such as excessive rainfall in Canada and the European Union. However, competitive supplies from the Black Sea region helped offset the impact. Maize prices went up because of logistical challenges caused by low water levels in Brazil's Madeira River and the U.S.'s Mississippi River. On the other hand, rice prices decreased by 0.7%, reflecting relatively quiet market activity.
The price of vegetable oil increased by 4.6% in August, with palm, soy, sunflower, and rapeseed oils all experiencing gains. The rise in palm oil prices was due to lower-than-expected production in Southeast Asia, while the increase in soyoil prices was linked to reduced crushing volumes in the U.S. Additionally, the dairy sector saw a price hike of 3.8%, with all major dairy products, including milk powder, butter, and cheese, experiencing higher prices.
Meat prices increased by 0.4%, mainly due to higher demand for Brazilian poultry. However, bovine and pig meat prices remained stable, while ovine meat prices decreased slightly.
The FAO has slightly adjusted its forecast for global cereal production in 2024, now estimating a total output of 2.853 billion tonnes. This adjustment is due to increased forecasts for rice and wheat production, despite a slight reduction in coarse grains output. Wheat production is expected to increase by 0.5%, while global rice production is forecasted to reach a record high of 539.2 million tonnes.
Global consumption of cereal is projected to increase by 0.4%, and cereal stocks are expected to expand by 1.2%. However, international cereal trade is anticipated to decrease by 2.7%. Nevertheless, there is an expected recovery in rice trade by 2025, driven by demand from Africa and the Near East.
