Global food prices rise to the highest level in 10 years

Global food prices rise to the highest level in 10 years
Global food prices rise to the highest level in 10 years

The United Nations Food and Agriculture Organization (FAO) said on Thursday that global food prices rose for the second month in a row in September, hitting a 10-year peak, driven by higher prices for cereals and vegetable oils.

The Rome-based organization also slightly raised its forecast for global cereal production in 2021 to a record 2.8 billion tonnes from the 2.788 billion tonnes estimated last month, but said that record forecast remained below forecast consumption.

The FAO Food Price Index, which monitors world prices of the most traded food commodities, averaged 130 points last month, the highest reading since September 2011, compared to the revised reading for August of 128.5 points.

The previous August reading was 127.4 points.

On an annual basis, prices rose 32.8% in September.

Agricultural commodity prices rose sharply last year, driven by poor harvests and strong demand from China.

The FAO Cereal Price Index rose 2.0% in September from the previous month. This led to an increase of about 4% in wheat prices, as the UN agency indicated a tightening of export availability amid strong demand.

“Among the major grains, wheat will be the focus in the coming weeks as demand must be tested against rapid price hikes,” FAO chief economist Abdolreza Abbassian said in a statement.

Meanwhile, FAO indicated that global vegetable oil prices rose by 1.7% on a monthly basis, and showed a year-on-year increase of about 60%, with palm oil prices rising due to strong import demand and concerns about labor shortages in Malaysia.

Palm oil futures also rose in early October to reach record levels, as an increase in crude oil markets led to further support for vegetable oils used in biodiesel.

Global sugar prices rose 0.5% in September on concern about bad weather conditions for crops in the largest exporter, Brazil, offset in part by a slowdown in import demand and favorable production prospects in India and Thailand, according to the Food and Agriculture Organization.

As for cereal production, the FAO forecast a record global crop of 2.800 billion tons in 2021, slightly up from the 2.788 billion tons estimated a month ago.

This would be lower than the world’s cereal utilization of 2.811 billion tons, a forecast revised upwards of 2.7 million tons from the previous month to mainly reflect increased use of wheat in animal feed, FAO said in a note on demand and demand for cereals.

FAO added that world cereal stocks are expected to decline in 2021/202 but will remain at a comfortable level.

 
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