A fresh wave of climate shocks, geopolitical tensions and trade disruptions is pushing the global food system into another period of supply anxiety, with international food prices rising to their highest level since late 2022 and raising fresh concerns for food-importing economies.
The United Nations Food and Agriculture Organisation (FAO) Food Price Index averaged 133.3 points in August 2026, up 1.9 per cent from a revised 130.8 points in July, as prices of cereals, vegetable oils, sugar, meat and dairy all increased.
The August reading was the highest since November 2022, although it remained 16.8 per cent below the index’s record peak reached in March 2022 following Russia’s full-scale invasion of Ukraine.
The latest increase comes as extreme heat and drought across Europe threaten crop and livestock production, while renewed disruption around the Black Sea and uncertainty over the impact of an anticipated El Niño weather pattern are clouding the outlook for major food commodities.
Maximo Torero, FAO chief economist, said the simultaneous emergence of climate and geopolitical risks was beginning to restore a risk premium across global food markets.
“August’s increase in global food prices is a warning that the risk premium is returning to food markets: climate shocks, geopolitical tensions and disrupted trade logistics are converging to tighten supply expectations,” Torero said.
Cereals emerged as one of the clearest pressure points in August, with the FAO Cereal Price Index rising 2.2 per cent month-on-month to 116.3 points, its highest level since May 2024.
Wheat prices increased 2.6 per cent during the month and were 15 per cent above their year-earlier level, supported by disruptions to Black Sea export logistics, weaker European production prospects following hot and dry weather and a softer US dollar, which made dollar-denominated supplies more competitive.
Maize prices also climbed 2.5 per cent as concerns over yields in parts of the US Corn Belt and deteriorating production prospects in the European Union compounded strong ethanol and feed demand.
Disruptions to Ukrainian exports added further pressure, while concerns over input supplies following the closure of the Strait of Hormuz provided additional support to maize prices.
Sorghum and barley prices increased 3.9 per cent and 2.6 per cent respectively, while rice prices edged up 0.5 per cent on currency movements, sustained purchases by Asian and African countries and expectations of tighter Indica rice supplies.
The cereal market is being squeezed from several directions, with weather threatening production while geopolitical disruption is complicating the movement of grain from some of the world’s most important exporting regions.
The FAO has consequently reduced its 2026 global cereal production forecast by 3.4 million tonnes from its July estimate to 2.980 billion tonnes.
That would represent a 2 per cent decline from 2025 and the largest annual contraction since 2018.
Despite the downward revision, projected output would still be the second-highest on record.
Global cereal stocks are also expected to be tighter. FAO revised its forecast for cereal stocks at the end of the 2026/27 season down 1.1 per cent to 947.2 million tonnes, leaving inventories only marginally above the previous season.
Sugar recorded the highest increase among the major food categories, with the FAO Sugar Price Index jumping 11.9 per cent in August to 106.4 points, its highest level since June 2025.
The increase reflected growing concerns about global supplies in the 2026/27 season.
Persistent heat and dry conditions have weakened sugar-beet yield expectations in the European Union, where planted area was already expected to decline from the previous season.
In Asia, anticipated El Niño conditions are creating additional uncertainty around sugar production, while lower output in Brazil’s crucial Center-South region has further tightened the global outlook.
India’s announcement of duty-free raw sugar imports also contributed to the rise in international prices.
Vegetable oils climb to four-year high
The FAO Vegetable Oil Price Index increased 0.6 per cent to 196.9 points, extending its rise for a third consecutive month and taking it to its highest level since June 2022.
Palm and soybean oil prices led the increase.
Palm oil prices strengthened on robust global import demand and concerns that El Niño-related weather conditions could affect production in Southeast Asia.
South American soybean oil also remained firm because of strong export demand, although US prices weakened amid uncertainty over biofuel policy and its implications for domestic feedstock demand.
The increase was partly offset by lower sunflower and rapeseed oil prices as import demand remained subdued and expectations pointed to ample supplies in the 2026/27 season.
The FAO Dairy Price Index rose 2.3 per cent in August to 119.2 points, ending a three-month decline.
Milk powder and cheese prices increased as tighter milk supplies in the European Union, exacerbated by hot and dry conditions, pushed prices higher.
Skimmed milk powder rose 3 per cent, while whole milk powder increased 2.4 per cent. Cheese prices gained 2.7 per cent.
The dairy increase was moderated by rising seasonal production in Oceania, which weighed on milk powder prices and helped offset some of the gains in Europe.
The Meat Price Index also increased 1 per cent to 127.9 points, driven by higher poultry, pig and ovine meat prices.
Poultry prices strengthened on strong global import demand and a rebound in Brazilian export prices, while European pig meat prices rose as high temperatures slowed animal growth and reduced supplies of slaughter-ready pigs.
Bovine meat was the exception, with international prices declining as Brazil and Australia faced tighter access to major Asian markets and intensified competition for alternative destinations.
Supply outlook clouds food inflation
The latest FAO figures point to a global food market entering a more complicated phase in which production risks and geopolitical disruptions are increasingly reinforcing each other.
Europe’s weather problems are threatening maize, sugar-beet and livestock production. El Niño is raising concerns over palm oil and sugar supplies in Asia. At the same time, continued attacks and disruption around the Black Sea are complicating grain shipments from Russia and Ukraine.
The August index remains well below its March 2022 record, but the latest acceleration indicates that the relative calm in international food prices seen after the 2022 shock may be coming under renewed pressure.
The FAO’s 2026 production forecast offers some reassurance, as global cereal output is still expected to rank as the second-highest on record. But the direction of the market is becoming increasingly difficult to ignore.
With food prices now at their highest level since late 2022, cereal inventories being revised lower and climate and geopolitical risks converging, the global food market is once again being forced to price uncertainty, and for import-dependent economies, that uncertainty could soon become an inflation problem.
