FAO Food Price Index Reaches Highest Level in 18 Months

The FAO Food Price Index rose 2 percent in October to reach its highest level since April 2023. However, the Index remained 20.5 percent below the record high seen in March 2022.

 The Cereal Price Index rose 0.8 percent in October but remains 8.3 percent below its previous year’s value. Concerns over weather and production conditions in several major producers, including the European Union, Russia, and the United States, drove up wheat prices, while maize prices increased due to rising domestic demand in Brazil and Ukraine and dry conditions in Argentina. Rice prices, in contrast, fell by 5.6 percent in October due following the end of India’s export restrictions.

The Vegetable Oil Price Index saw the largest increase in October, rising by 7.3 percent to reach a two-year high. Soybean oil prices rose due to strengthening demand, while palm oil increases were due to a combination of seasonal declines and lower-than-expected harvests in several key Southeast Asian producers. Lowered anticipation production also drove up sunflower and rapeseed oil prices.

The Dairy and Sugar Price Indices also rose by 1.9 and 2.6 percent, respectively, while the Meat Price Index declined by 0.3 percent in October.

The latest AMIS Market Monitor also reflected the rising commodity prices seen in October. The report noted trade-related policy shifts in several countries, including the lifting of India’s minimum rice export price and easing import restrictions on maize in Turkey and rice and vegetable oils in Bangladesh.

Wheat production forecasts fell slightly in October but remain above 2023 levels. Wheat utilization prospects for 2024-2025 increased due to higher feed use in Asia, while trade is still expected to decline from 2023-2024 levels due to smaller imports by China and the European Union and smaller exports from the European Union, Russia, and Ukraine. Global wheat ending stock prospects declined and are expected to be below opening levels.

Maize production forecasts declined in October, with production now expected to be below its 2023 level. Utilization forecasts remained stable, with increasing feed use expected to drive utilization above 2023-2024 levels. Maize trade is also expected to be below 2023-2024 levels due to declining purchases by China and smaller exports from Brazil and Ukraine. Global maize ending stock forecasts fell in October but stocks are still expected to be above opening levels.

Rice production expectations also fell in October, while utilization forecasts increased slightly. Utilization is expected to reach record highs in 2024-2025. Rice trade forecasts increased due to the removal of restrictions in India. Global rice ending stock prospects fell slightly but are expected to reach record highs.

Soybean production forecasts remained stable in October, while utilization forecasts increased slightly. Trade expectations also rose slightly due to higher forecasted imports by Argentina, Egypt, and the European Union and high exports from Brazil. Global soybean ending stock forecasts rose in October.

Fertilizer markets remained largely stable in October. Natural gas prices fell in the United States but rose in Europe due to a temporary supply disruption in Norway.

Ammonia fertilizer and urea prices rose slightly due to limited export availabilities and tensions in the Near East. AMIS expects demand for both fertilizers to slow in the coming months and availability of ammonia fertilizer to increase.

Phosphate prices also rose slightly due to strong demand from India, export restrictions in China, and disrupted production in the United States following severe weather events. As with ammonia and urea, however, AMIS expects demand to slow toward the end of the year. This, combined with recovered production in the United States, is expected to drive prices back down.

Potash prices remained largely unchanged in October.

Sara Gustafson is a freelance communications consultant.