The Food and Agriculture Organization of the United Nations (FAO) has revealed that the benchmark for world food commodity prices surged to its highest level in 18 months in October, led by a sharp increase in vegetable oil quotations.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 127.4 points in October, up 2% from September and 5.5% from its value a year ago. The index remained 20.5% below its March 2022 peak.

The FAO Vegetable Oil Price Index spiked by 7.3% in October, hitting a two-year high due to rising quotations for palm, soy, sunflower and rapeseed oil, driven mainly by concerns about production.

Cereal and wheat production

Meanwhile, the FAO Cereal Price Index increased by 0.9% in October, led by rising wheat and maize export prices. Global wheat prices were affected by unfavorable weather conditions in major northern hemisphere exporters, the re-introduction of an unofficial price floor in the Russian Federation and rising tensions in the Black Sea region. 

World maize prices rose as well, driven in part by strong domestic demand and transport challenges in Brazil due to low river levels. By contrast, the FAO All Rice Price Index declined by 5.6% in October, reflecting lower indica rice quotations driven by expectations of heightened competition among exporters following India’s removal of export restrictions on non-broken rice.

Sugar and dairy

The FAO Sugar Price Index increased by 2.6% amid persisting concerns over Brazil’s 2024/25 production outlook following extended dry weather conditions. Rising international crude oil prices also contributed to the increase in sugar quotations by shifting more sugarcane toward ethanol production, while the weakening of the Brazilian real against the US dollar limited the increase.

The FAO Dairy Price Index rose by 1.9% in October, averaging 21.4% above its level at the same time last year. The increase was primarily driven by higher international cheese and butter prices, while quotations for milk powders declined.

Meat and poultry 

Bucking the general upward trend, the FAO Meat Price Index dropped by 0.3% from September, mainly due to lower pig meat prices resulting from increased slaughter rates in Western Europe amid weak domestic and international demand. 

World poultry prices fell slightly in October, while those of ovine meat remained stable. By contrast, bovine meat prices increased moderately, underpinned by stronger international purchases.

Forecasts point to more rice and wheat, declining maize output

According to FAO’s new Cereal Supply and Demand Brief, global cereal production in 2024 is forecast to decline by around 0.4% from the previous year to 2,848 million metric tons, the second-largest output on record.

World wheat production is expected to increase, buoyed by production upturns in Asia as a result of area expansions and conducive weather conditions, which more than offset large declines among key producers in Europe. Global coarse grain production is forecast to decline from its 2023 record level, mostly due to a sizable crop in maize output because of adverse weather conditions. Meanwhile, world rice output in the 2024/25 season could reach a record high of 538.9 million metric tons, boosted by record-breaking plantings.

Further, world cereal utilization is forecast to grow by 0.5% to 2,857 million metric tons in 2024/25, led by increasing food consumption of rice and wheat. Global cereal stocks are predicted to expand by 0.6% to 889 million metric tons, largely due to an expected expansion in rice inventories. 

International trade in cereals is now forecast at 485 million metric tons, representing a 3.9% contraction from the 2023/24 level. Global trade of rice is forecast to increase, while that of wheat and coarse grains to decline.