By Casey Sprake
In September 2024, the UN Food and Agriculture Organization’s (FAO) Global Food Price Index (FFPI), the benchmark for global food commodity prices, experienced its fastest increase in 18 months.
Prices rose across all five of the FFPI’s commodity group price indices, with sugar leading the surge. The FFPI averaged 124.4 points for the month, marking a 3.0% increase from August and a 2.1% year-on-year rise.
The FAO Sugar Price Index saw the most significant jump, climbing 10.4% month on month (m/m). This spike was driven by worsening crop conditions in Brazil and concerns that India’s decision to lift restrictions on sugarcane for ethanol production might reduce its sugar exports.
The FAO Cereal Price Index rose 3.0% m/m, mainly due to higher wheat and maize prices. International wheat prices have increased, primarily due to excessively wet conditions in Canada and the EU, though competitive supplies from the Black Sea region offset some of the pressure. Low water levels on major transportation routes along Brazil’s Madeira River and the Mississippi River in the US influenced maize prices.
Meanwhile, the FAO All Rice Price Index dropped by 0.7% m/m, reflecting less active trading activity. The FAO Vegetable Oil Price Index rose by 4.6% m/m, with palm, soy, sunflower, and grapeseed oils all seeing higher prices. Palm oil prices were buoyed by lower-than-expected production in major South-East Asian producers, while soy oil prices rebounded due to lower-than-expected US crushing volumes.
The FAO Dairy Price Index increased by 3.8% m/m, with higher quotations for whole and skim milk powder, butter, and cheese. The FAO Meat Price Index edged up 0.4% m/m, driven by more robust demand for Brazilian poultry meat. Bovine and pig meat prices remained stable, while sheep meat prices decreased slightly from August.
Casey Sprake is an investment analyst at Fixed Income, Anchor Capital
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