Global food prices hit 18-month high in October -FAO
Onome Amuge
World food prices climbed to an 18-month peak in October 2024, according to data from the United Nations’ Food and Agriculture Organization (FAO). With vegetable oils spearheading the rise, most food staple prices witnessed significant increases, pushing the FAO Food Price Index to an average of 127.4 points, a 2 percent surge from the revised September levels.
This follows September’s gains, which saw the index reach its highest point since July 2023 on account of soaring sugar prices.
The FAO Cereal Price Index displayed a moderate increase of 0.9 points (0.8 percent) from September to October 2024, reaching an average of 114.4 points. While this represents a minor increase from the previous month, the index remains lower compared to the same period last year, with a drop of 10.3 points (8.3 percent) from its October 2023 value.
The global wheat market experienced its second month of price increases, largely due to worries about unfavourable weather conditions affecting winter crop sowing in key exporters. Specifically, several key Northern Hemisphere wheat-exporting countries, including the European Union,Russia, and the U.S, faced unfavourable climatic conditions during the winter crop sowing season, which led to concerns about the upcoming harvest and consequently contributed to rising wheat prices.
Global maize prices continued their upward trajectory, primarily due to robust domestic demand in Brazil and logistical challenges caused by low river levels, which led to transportation difficulties in certain areas of the country. Dry conditions in Argentina that hindered maize planting, along with consistent demand for maize from Ukraine, also fueled the upward pressure on prices.
These factors combined to create a stronger, more favourable environment for maize prices, contributing to the overall increase in the global maize market.
The FAO All Rice Price Index experienced a 5.6 percent decrease in October, primarily due to reduced prices for Indica rice. The decrease in Indica rice prices can be attributed to expectations of increased competition among exporters, following India’s decision to lift export restrictions on non-broken rice.
While the prices of barley, a commonly used coarse grain, increased during this period, the prices of sorghum, another type of coarse grain, witnessed a decline.
The FAO Vegetable Oil Price Index soared to a two-year high of 152.7 points in October, up 10.4 points (7.3 percent) from September. The sharp increase in the index was fueled by a strong upward trend across a wide range of vegetable oils, including palm oil, soy oil, sunflower oil, and rapeseed oil, all of which experienced rising prices in October.
The international palm oil market experienced its fifth consecutive month of price increases in October, largely driven by concerns over lower-than-anticipated output in key producing countries in Southeast Asia, coupled with the impending seasonal decline in production.
Simultaneously, global sunflower and rapeseed oil prices also continued to soar, buoyed by prospects of lower supplies in the 2024/25 production season.
Rising global demand for soy oil, amidst limited supplies of alternative vegetable oils, propelled soyoil prices upward.
October saw the FAO Dairy Price Index increase by 2.5 points (1.9 percent) from September, reaching 139.1 points. This marks a leap from the index’s value a year prior, representing a year-over-year growth of 24.5 points (21.4 percent).
International cheese prices were the major driver of the index’s growth, largely attributable to limited supplies in the face of robust import demand, particularly for spot supplies. This supply shortage was exacerbated by strong domestic sales, particularly in the European Union, where milk production declined seasonally.
October witnessed the thirteenth consecutive monthly rise in global butter prices, primarily fueled by strong internal demand, limited stockpiles, and seasonally reduced milk production in Western Europe. This continued upward trend in butter prices stands in stark contrast to the downward trajectory of milk powder prices, particularly for skim milk powder, which was primarily driven by the rising seasonal milk production in Oceania and softening global import demand.
The FAO Meat Price Index recorded a marginal decrease of 0.3 percent in October, from its revised value in September. Despite this slight decline, the index remained 8.4 points (7.5 percent) higher than its level a year ago.
The international market for pork experienced the steepest decline in prices in October, due to a rise in pig slaughtering in Western Europe, coinciding with a depressed domestic and foreign demand for pork products.
Meanwhile, global poultry meat prices saw a slight decrease, with a downward trend in prices fueled by increased export supplies from major poultry producing countries.
October saw a second consecutive monthly rise in the FAO Sugar Price Index, with an increase of 3.3 points (2.6 percent) from September. This uptick, however, was not sufficient to erase the significant year-over-year decrease of 29.6 points (18.6 percent) in the index’s value.
Despite the recent upward trend, sugar prices remain relatively low compared to their level a year ago.
Sugar prices surged in October as persistent concerns about the 2024/25 sugarcane production outlook in Brazil weighed heavily on the market.
Extended periods of dry weather conditions in Brazil, the world’s largest sugarcane producer, raised serious doubts about the upcoming season’s output, which pushed sugar prices upwards.
Moreover, higher international crude oil prices encouraged increased sugarcane usage for ethanol production in Brazil, leading to a further tightening of sugar supplies.