The latest data shows that global food prices have recently risen to an 18-month high. Market observers predict that some food prices are expected to continue to rise.
According to the latest data from the Food and Agriculture Organization of the United Nations (FAO), global food commodity prices reached the highest level since April 2023 in October. Grains, meat, dairy products, vegetable oils, and sugar all rose by 2% in October.
Industry experts interviewed by CNBC suggest that the prices of some major food items may continue to rise globally in the coming year.
From January to October, the prices of vegetable oils saw the largest increase, rising by 24% driven by increases in palm oil, soybean oil, sunflower seed oil, and rapeseed oil.
Cheang Kang Wei, a physical agricultural broker at financial services company StoneX, stated that plant oil prices are expected to increase significantly next year. With global demand increasing and supply limited, palm oil will be a focal point of concern.
Palm oil is one of the most widely used food oils. Indonesia, the largest producer of palm oil, has recently been affected by the El Nino weather phenomenon. The Indonesian Palm Oil Association reported a nearly 5% decrease in domestic production in the first 8 months of 2024 compared to the same period last year.
“Indonesia is promoting the use of more palm oil for biodiesel production, further exacerbating supply tightness,” Cheang told CNBC, noting that similar supply challenges may also lead to higher prices for other vegetable oils such as rapeseed oil.
Since the beginning of this year, meat prices under the Food and Agriculture Organization (FAO) food price index have risen by 10%.
Stephen Nicholson, a strategist at Rabobank, pointed out that severe drought in the southern plains of the United States has led to a “serious reduction” in cattle herds, causing beef prices to soar.
The United States is the largest beef producer globally and a major exporter. The dry weather has reduced the number of cattle in the United States to the lowest level since the 1950s, leading to a reduction in beef exports and an increase in beef imports.
According to FactSet data, feeder cattle (young cattle mature enough for slaughter) futures traded on the Chicago Mercantile Exchange have risen by 16% to $2.59 per pound so far this year.
Both Rabobank and the UK Agriculture and Horticulture Development Committee (AHDB) predict a overall decrease in global beef production, with beef prices continuing to rise in 2025.
Matthew Biggin, commodity analyst at financial group BMI, expressed that coffee and cocoa prices face the “greatest risk,” even though they are not reflected in the FAO index.
The BMI report highlighted adverse weather in major coffee producer Brazil as a driving factor in the bullish market sentiment.
Coffee futures on the Intercontinental Exchange (ICE) have risen by nearly 70% to $3.18 per pound so far this year.
For cocoa, the primary cocoa beans producing region, West Africa, continues to be affected by harsh weather and cocoa tree diseases. The largest producer, Cote D’Ivoire, has suffered from heavy rainfall, leading to poor bean quality and upward pressure on cocoa prices.
Currently, cocoa futures trading on the Intercontinental Exchange in the US are priced at $9,425 per ton. Analysts at Citigroup anticipate cocoa prices to rise to $10,000 per ton within the next three months.
As cocoa is a key ingredient in chocolate, global cocoa supplies reaching the lowest levels in over two decades are affecting the beloved sweet’s price.