Onome Amuge
Global food prices fell for a second consecutive month in October, signalling relief in international commodity markets after two years of volatility. Yet for millions of households in developing economies, particularly in Africa and parts of Asia, cheaper global benchmarks have done little to ease food insecurity at home.
According to data published on Friday by the United Nations’ Food and Agriculture Organization (FAO), its closely watched Food Price Index averaged 126.4 points in October, down from a revised 128.5 in September. The index, which tracks monthly changes in the international prices of cereals, meat, dairy, sugar, and vegetable oils, now sits 21 per cent below its March 2022 peak, when Russia’s invasion of Ukraine disrupted grain and energy markets.
The latest decline reflects robust harvests and improved export flows across several key commodities. Yet economists warn that local food costs in many emerging markets remain high, as weak currencies, high logistics costs, and import dependence continue to buffer consumers from falling international prices.
The FAO’s latest figures suggest that global agriculture is gradually regaining equilibrium after several years of disruption. World cereal production is projected to hit a record 2.99 billion tonnes in 2025, a 4.4 per cent increase from 2024, with wheat, maize and rice all expected to post higher yields on the back of strong harvests in North America, Eastern Europe and parts of Asia.
The FAO Sugar Price Index fell sharply by 5.3 per cent in October to its lowest level since December 2020. The drop followed an increase in output from Brazil, the world’s largest sugar producer, coupled with improved harvest prospects in Thailand and India. Lower crude oil prices also contributed to the decline by reducing demand for ethanol, a sugar-derived biofuel alternative.
Dairy products saw a similar trend. The FAO Dairy Price Index slipped 3.4 per cent, reflecting ample export supplies from the European Union and New Zealand. Butter and milk powder prices weakened as global buyers reduced orders amid high inventories. Meat prices fell by 2 per cent, led by declines in pig and poultry markets, while beef prices continued to edge higher due to strong demand in Asia and the Middle East.
The only major outlier was vegetable oils, which rose by 0.9 per cent to their highest level since July 2022. Analysts attribute the increase to tighter palm oil supplies in Southeast Asia and harvest delays in sunflower and rapeseed crops around the Black Sea region.
In a separate report, the FAO projected global cereal stocks to expand by nearly 6 per cent to 916 million tonnes in 2025, the highest level in seven years. The resulting stocks-to-use ratio, a measure of supply security, is expected to climb to 31 per cent.
“This is a clear signal that the supply side of global agriculture has recovered from the shocks of the pandemic, the Ukraine war, and extreme weather events. We are now looking at comfortable stocks across major exporters, which should, in theory, keep prices contained into 2025,”said Marina Lopez, senior commodities analyst at the International Grains Council.
FAO also projected world trade in cereals to grow by 3.2 per cent to 499 million tonnes, reflecting strong import demand from Asia and parts of North Africa. Wheat shipments are expected to rise, led by purchases from Indonesia and China, while rice trade may decline slightly following export restrictions in India earlier this year.
Despite the positive global trend, many consumers across Africa and South Asia are not yet feeling the benefits. Local food inflation remains in double digits in countries such as Nigeria, Kenya, and Pakistan, as domestic currencies continue to weaken against the US dollar and imported food products remain expensive.
The disparity between international benchmarks and local prices underscores the structural weaknesses in many developing economies, attributed to poor infrastructure, limited storage capacity, and a reliance on imported staples.
Food imports in many developing economies are priced in dollars, meaning even modest devaluations can offset any benefit from cheaper global commodities. In Ghana, for instance, the cedi has fallen more than 10 per cent against the dollar this year, while the Egyptian pound has lost roughly 30 per cent of its value since 2022.
Higher shipping costs have also limited the transmission of lower commodity prices to local markets. Freight rates on major agricultural routes have risen amid Red Sea disruptions, port congestion in Asia, and insurance premiums linked to geopolitical tensions.
The FAO’s forecasts rest on an assumption of stable weather patterns, but climate volatility remains a persistent risk. Drought in Argentina, flooding in Bangladesh, and erratic rainfall across the Horn of Africa have already affected planting decisions this year.
“Global supply looks comfortable today, but all it takes is one poor harvest in a major exporting country to reverse the trend. The increasing unpredictability of climate events is now a structural feature of agricultural markets,” said Lopez.
The El Niño weather pattern, which tends to bring hotter and drier conditions to parts of Asia and Africa, has also raised concerns about yields in the coming months. While higher production in the Northern Hemisphere may offset some regional losses, analysts warn that volatility could return quickly.
One of the most significant factors behind October’s price movements was energy. The fall in crude oil prices, down about 10 per cent from September, reduced demand for sugar-based ethanol and vegetable oil-derived biodiesel, pushing sugar and oilseed prices lower.
“The link between energy and agriculture is tighter than ever. When oil prices fall, it reduces the incentive for farmers and refineries to divert crops into biofuel production, which in turn adds to food supply. Conversely, if oil prices rebound, we could see sugar and oilseed prices climb again,”said Caroline Jenkins, head of soft commodities research at HSBC.
Brazil, which dominates global sugar exports, is projected to deliver another record harvest next year, reinforcing downward pressure on prices.
Meanwhile, Russia’s ongoing war in Ukraine continues to cast a shadow over grain trade routes in the Black Sea. Although Ukraine has managed to increase exports through alternative routes along the Danube, the conflict has kept insurance and transport costs high. The FAO noted that while global supplies are strong, regional disruptions could still create temporary shortages and price spikes.
Meanwhile, protectionist tendencies are resurfacing. India’s restrictions on rice exports, introduced in 2023 to curb domestic inflation, have distorted global rice markets and raised prices for importing nations in Africa and the Middle East.
For now, global food commodity prices appear to be on a stable downward path, buoyed by record harvests and replenished stockpiles. Yet for policymakers, the challenge lies in ensuring that this global abundance translates into affordable food at the local level.
With global demand expected to rise modestly next year and stocks at their highest since 2017, the FAO remains cautiously optimistic. “We have breathing room in the system. But food security depends not only on supply but also on access. That is where many developing countries still struggle,” it stated.
For households in emerging economies, the struggle persists, even as global markets begin to exhale in relief.
