UN world food price index surges to highest level since April 2023

The United Nations’ world food price index surged to its highest level since April 2023 in November, marking the largest increase in 19 months. The surge has been primarily driven by rising vegetable oil prices, data released on Friday showed. The price index, compiled by the UN Food and Agriculture Organization (FAO) to monitor global food commodities, climbed to 127.5 points, up from a revised 126.9 points in October. This represents a 5.7% increase compared to the same month last year.

The vegetable oil index saw a significant rise, increasing by 7.5% from October and 32% from the previous year, primarily due to concerns over reduced palm oil production caused by excessive rainfall in Southeast Asia. Prices of Soybean oil rose due to stronger global demand, while rapeseed and sunflower oil saw price hikes.

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On the other hand, other food price indexes experienced declines. Cereal prices fell by 2.7% from October, driven by weaker wheat and rice prices, while sugar prices dropped by 2.4% due to the onset of sugarcane crushing in India and Thailand and easing concerns over Brazil’s crop prospects.

In a separate update, the FAO marginally revised its forecast for global cereal production in 2024, lowering it from 2.848 billion metric tons to 2.841 billion, which represents a 0.6% drop from the previous year. Despite this decline, the 2024 production is expected to remain the second largest on record.

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The FAO projected a 0.6% increase in global cereal utilization to 2.859 billion tons for the 2024/25 season, reflecting growing consumption. Consequently, the FAO anticipates the cereal stocks-to-use ratio will decrease slightly to 30.1% by the end of the 2025 season, down from 30.8%, but still indicating a “comfortable level of global supply.”