Global food commodity prices reached their highest level since April 2023, showing a modest 0.5% increase in November compared to October, according to the Food and Agriculture Organization (FAO) of the United Nations. The FAO Food Price Index, which monitors global price trends across various food commodities, averaged 127.5 points in November, 5.7% higher than the same period last year but still significantly below the peak seen in March 2022.
A major driver of this rise was the FAO Vegetable Oil Price Index, which surged by 7.5% month-on-month and 32% year-on-year. Palm oil prices led the charge due to production concerns stemming from excessive rainfall in Southeast Asia. Soyoil prices also climbed as global import demand intensified, while tightening global supplies pushed up rapeseed and sunflower oil prices. This marked the second consecutive month of substantial increases for vegetable oils.
Dairy prices also contributed to the overall rise. The FAO Dairy Price Index grew by 0.6% in November, driven by a resurgence in global demand for whole milk powder. Butter prices hit record highs amid strong demand and limited inventories in Western Europe, while cheese prices rose due to constrained export availability.
However, not all commodity categories followed this upward trend. The FAO Cereal Price Index fell by 2.7% from October and was 8% lower than a year ago. Global wheat prices declined due to higher supplies from Southern Hemisphere harvests and reduced international demand. Maize prices remained stable, balancing strong domestic demand in Brazil and the U.S. with favourable weather in South America and weaker demand for Ukrainian exports. The All-Rice Price Index dropped by 4%, reflecting increased market competition, harvest pressures, and currency fluctuations.
Sugar and meat prices also declined in November. The FAO Sugar Price Index decreased by 2.4%, influenced by the onset of crushing seasons in India and Thailand and improved crop prospects in Brazil following recent rainfall. The Meat Price Index fell by 0.8%, largely driven by lower pig meat prices in the European Union due to ample supply and subdued demand. Poultry and ovine meat prices saw minor declines, while bovine meat prices remained stable.
Looking ahead, the FAO forecasts a 0.6% dip in global cereal production for 2024, totaling 2,841 million tonnes, the second-largest output on record. Wheat production is expected to hold steady at 789 million tonnes, while maize production could decline by 1.9% due to poor yields in the EU and U.S. Conversely, rice production is projected to reach a record 538.8 million tonnes, up 0.8% from the previous year.
For 2025, drought conditions in Russia may limit winter wheat expansion in the northern hemisphere, while favourable conditions and government support are likely to boost plantings in China and India. In the southern hemisphere, Argentina’s maize planting area is set to shrink due to dry weather, though Brazil’s planting levels are expected to remain steady. South Africa may increase white maize planting due to high prices but could reduce yellow maize sowings.
Despite these fluctuations, global cereal production is projected to grow by 0.6% in 2024/25, with consumption of rice and wheat leading the way. While cereal stocks are forecasted to decline by 0.7%, the stock-to-use ratio of 30.1% remains within comfortable levels.
However, global cereal trade is anticipated to drop by 4.6% due to reduced wheat and maize exports, partially offset by increased rice trade.
