Food prices soar. Why? FAO explains

International food prices climbed to a new peak, exceeding the July 2011 level.

In October, the FAO Food Price Index averaged 133.2 points, up 3.9 percent from its September level. Thus, the Index continues to grow for the third month in a row.

Cereals. Compared to the previous month, the value of the Cereals Price Index in October increased by 3.2 percent, wheat prices jumped by 5 percent, and an increase in world prices was also recorded for the remaining types of cereals. The main reason: a drop in the expected harvest in the main exporting countries, including the Russian Federation, and a decrease in supply in global markets.

FAO forecasts global cereal consumption in the 2021-2022 agricultural year at 2,812 million tons, up 1.7 percent from the previous year.

Oils. The value of the Vegetable Oil Price Index in October increased by 9.6 percent, reaching the highest level ever recorded. The growth was due to the growth of quotations for palm, soybean, sunflower and rapeseed oils.

Dairy products. The value of the Dairy Price Index increased by 2.6 points compared to September. The reason: the increasing global demand for butter, skimmed milk powder and whole milk powder, as well as the desire of buyers to fill up the stocks. In contrast, cheese prices have generally remained stable. 

Meat products. The average value of the Meat Price Index was down 0.7 percent from the revised September figure. Thus, the decline in prices for this type of product has been going on for the third month. Pork prices fell due to reduced purchases from China, and beef – due to a sharp decline in export prices from Brazil. At the same time, prices for poultry and mutton rose.

Sugar. The average FAO Sugar Price Index declined for the first time in six months to 1.8 percent below its September level. Reason: the decrease in purchases in the world market. 

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FAO Food Price Index (FPI) reflects the monthly movement of international prices for a basket of foodproducts. It is formed on the basis of the average values ​​of price indices for five product groups, adjusted for the average share of each such group in the volume of exports in the period 2014-2016.