FAO's world food price index rises to 136.0, back to a late-2022 level

The UN food price index averaged 136.0 in September, the same reading as in November 2022 and the highest since that month, the Food and Agriculture Organization said on Friday.

It rose 1.5% from August and 5.8% from a year earlier. It remains 24.3 points, or 15.1%, below the peak of March 2022. The index measures export prices of cereals, vegetable oils, sugar, meat and dairy, not the bill at a grocery store.

FAO still expects 2026 world cereal production of 2,979 million tonnes, 2.1% below last year, which would still be the second-largest harvest on record. It cut its cereal trade forecast to 505.8 million tonnes for the 2026/27 season, 3.5% below last season's record and 0.7% below the forecast of a month ago.

Wheat and maize exports are likely to fall by more than FAO expected a month ago, because Black Sea routes remain disrupted and other transport cannot replace them.

FAO also cut coarse grains, including maize, after hot, dry weather and the prospect of smaller harvests in the European Union and the United States. It raised the wheat forecast after better weather in Australia.

FAO raised its forecast for stocks at the close of the season in 2027 to 950 million tonnes, from 947.2 million tonnes a month ago. At 950 million tonnes, stocks would match the level at the start of the season. Set against expected use, stocks would equal 31.7% of use, down from 32.0% the season before.

Crop prices rose, animal products did not

Prices rose for cereals, sugar and vegetable oils. Meat fell, and FAO called dairy stable.

Cereal prices are also 17.2% higher than a year earlier. Wheat rose 6.3%, to its highest since August 2023. FAO pointed to trouble shipping grain out of the Black Sea, and to dry weather in parts of North America before farmers sow the next crop.

Maize rose 5.6%. FAO cited concern about the crop in the United States, less maize available to export from Brazil, and disrupted Black Sea trade.

FAO said uncertainty over shipping through the Strait of Hormuz kept concerns about fuel, fertilizer and freight costs up, and that this supported prices of crops used to make fuel, including maize. The Agricultural Market Information System, which FAO hosts, noted elevated freight rates and firmer fertilizer markets. In August, FAO said concerns over input supplies after the closure of the strait were supporting maize prices.

Sugar rose on expectations of tighter supplies next season, and palm oil lifted vegetable oils on strong import demand and dry weather in Southeast Asia. Meat fell as pig and poultry prices dropped, with plenty of both available to export.

The Invesco DB Agriculture Fund, CDBA, holds futures on corn, wheat, soybeans, sugar and other crops. From the close on Monday, August 31, through Thursday, October 1, it fell 4.1%, while the FAO index rose.

The FAO index averages export prices over the month. The fund's price follows daily futures.

"We are seeing a persistent and increasingly broad based build up in global commodity prices, as disruptions in the Strait of Hormuz and the Black Sea combine with climate shocks, putting pressure on energy, transport and key food commodities," said Maximo Torero, FAO's chief economist.

"If sustained, these pressures will soon pass through to consumer food prices, especially in food and energy import dependent countries."

Wheat prices eased in the last days of September. Whether the disruptions persist is still open, and FAO's next index is due on Friday, November 6.