Global food prices hit 19-month high amid surging vegetable oil costs:  FAO

GLOBAL – The United Nations’ Food and Agriculture Organization (FAO) has reported a sharp increase in its world food price index, marking its highest level since April 2023.

The index, which tracks the international prices of the most globally traded food commodities, rose to 127.5 points in November, up from 126.9 in October.

This marks a 5.7% increase compared to the same period last year and represents the largest month-on-month gain in 19 months.

According to FAO, the primary driver of the increase was a significant surge in the vegetable oil index, which climbed 7.5% from October levels and soared 32% year-on-year.

The rise is attributed to reduced palm oil production due to excessive rainfall in Southeast Asia, which disrupted harvesting and processing.

Global soy oil prices rose sharply due to heightened import demand, while rapeseed and sunflower oil prices also recorded significant gains.

While vegetable oils saw a dramatic uptick, other food price indexes moved in the opposite direction.

The FAO reported a 2.7% drop in cereal prices from October, driven by weaker wheat and rice prices. Improved supply conditions, including higher-than-expected yields in key exporting countries, have alleviated some market pressures.

Sugar prices also fell by 2.4% as major producers India and Thailand began their crushing seasons, and concerns over adverse weather affecting Brazil’s crop diminished.

However, some analysts warn that sugar markets remain vulnerable to future weather disruptions, particularly in the context of the ongoing El Niño phenomenon.

In a separate report, the FAO revised its forecast for global cereal production in 2024, slightly lowering it to 2.841 billion metric tons from 2.848 billion estimated earlier.

Although this represents a 0.6% decline from last year’s record harvest, it still marks the second-largest cereal output on record.

Global cereal utilisation is projected to rise by 0.6% to 2.859 billion metric tons in the 2024/25 season, fueled by increased consumption in emerging markets and expanding livestock feed demand.

However, the cereal stocks-to-use ratio is expected to decline slightly to 30.1% from 30.8%, a level the FAO describes as “comfortable” but indicative of tightening global reserves.

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