Global Food Prices Reach 18-Month High, Some Categories Expected to Continue Climbing
Global food prices have surged to an 18-month high, driven primarily by a surge in vegetable oil prices, according to the United Nations’ Food and Agriculture Organization (FAO). The FAO Food Price Index, which monitors the prices of five food baskets, rose by 2% in October, with the vegetable oils category experiencing the largest price spike, jumping 24% since the start of the year.
Several food categories are expected to continue climbing in the year ahead, including:
* Palm oil and other vegetable oils: Vegetable oil prices are expected to rise significantly next year due to supply constraints and higher global demand.
* Beef: Beef prices have surged due to drought in the U.S. southern plains, which has reduced the cattle herd. Rabobank and the U.K.’s Agriculture and Horticulture Development Board expect global beef production to decline, keeping prices elevated.
* Coffee and cocoa: Prices of coffee and cocoa face greater price uncertainty than other commodities, with coffee futures jumping almost 70% year-to-date. Cocoa prices are expected to rise to $10,000 per ton within the next three months.
* Fruits and vegetables: A category that would be greatly impacted by policies proposed by U.S. President-elect Trump would be fruit and vegetables. Trump’s proposed tariffs on goods from China, Canada, and Mexico could lead to price increases for U.S. consumers.
The FAO index measures raw commodity prices, but the increase suggests that higher food prices may continue to affect consumers. Supply-side factors, ranging from weather to transportation challenges, have been the main drivers of the price increases.
