Food Prices Reach 18-Month High — UN Report

UN Sounds Alarm as Food Prices Hit 18-Month Peak

“Persisting concerns over the 2024/25 production outlook in Brazil, following a prolonged period of dry weather...”

Global food prices reach 18-month high, driven by vegetable oil price surge - UN FAO report.

The United Nations Food and Agriculture Organization (FAO) reported on November 7 that global food prices surged in October, reaching an 18-month high. This significant increase brought prices to their highest level since April 2023.

The primary driver of this price surge was a 7.3% jump in vegetable oil prices. Most major food categories also experienced price increases, contributing to the overall rise.

According to the FAO, its Food Price Index (FFPI) climbed to 127.4 points in October. This represents a 2% increase from the revised September figure of 124.9 points.

Compared to the same period last year, the FAO Food Price Index was 5.5% higher in October. This upward trend may have implications for global food affordability and security.

The FAO Food Price Index rose to 127.4 points in October, a 2% increase from September's revised figure of 124.9 points. Although this marks a 5.5% year-over-year increase, the index remains 20.5% below its March 2022 peak of 160.2 points.

This peak was triggered by Russia's invasion of Ukraine, which caused significant disruptions in global food markets. The FAO Food Price Index, a benchmark for international food commodity prices, has been monitoring fluctuations in key food categories.

In October 2024, vegetable oil prices saw a significant 7% surge, primarily driven by concerns over potential production disruptions and robust demand. This increase was broad-based, with palm, soy, sunflower, and rapeseed oils all recording higher quotations.

Palm oil prices climbed for the fifth consecutive month, fueled by worries over lower-than-expected outputs and seasonal production declines in key Southeast Asian producers. This trend contributed substantially to the overall rise in vegetable oil prices.

Sugar prices also rose by 2.6% in October, maintaining an upward trajectory. This increase stems from uncertainty surrounding Brazil's 2024/25 sugar output, as well as the impact of higher global crude oil prices. The latter encourages sugarcane diversion for ethanol production in Brazil, the world's leading sugar producer.

“Persisting concerns over the 2024/25 production outlook in Brazil, following a prolonged period of dry weather conditions, pushed sugar prices up in October.

“Additionally, higher international crude oil prices, which stimulate a greater use of sugarcane for ethanol production in Brazil, further contributed to the increase in prices,” the report state.

Global cereal prices edged up 0.8% in October, primarily driven by wheat price increases. Wheat prices were influenced by unfavorable planting conditions in the Northern Hemisphere and Russia's introduction of an unofficial export price floor.

Maize prices also saw a modest rise, contributing to the overall cereal price growth.

Dairy prices surged 2% in October, fueled by robust demand for cheese and butter. Tight global supplies, particularly in Europe, further exacerbated price pressures.

Key Price Movements:

• Cereal prices: +0.8% (wheat, maize)
• Dairy prices: +2% (cheese, butter)
• Drivers: Unfavorable planting conditions, Russia's export price floor, strong demand, tight supplies

FAO Report Highlights:

• Wheat prices impacted by Northern Hemisphere planting conditions

• Russia's unofficial export price floor influences wheat market

• Cheese and butter demand drives dairy price increase amid tight supplies.

Global beef prices continued to rise, driven by sustained international demand.

“International pig meat prices fell the most, reflecting increased slaughter in Western Europe amid weak domestic and foreign demand.

“World poultry meat prices fell slightly, pressured by higher export supplies from major global producers,” the report stated.