Inflation, supply chain disruptions push world food prices to highest level in ten years

GLOBAL – Runaway inflation and supply chain disruptions across the globe have pushed world food prices upwards for a third consecutive month in October to reach a fresh 10-year peak, according to the latest report by the United Nations Food and Agriculture Organization (FAO). 

October’s gains in the FAO Food Price Index were led by vegetable oils, with prices increasing 9.6 percent in October from the previous month – a new all-time high. 

Cereal prices also rose sharply, gaining 3.2 percent from the previous month and a massive 22.4 percent from a year ago. 

Within the cereals category, wheat prices rose for a fourth straight month to reach their highest level since November 2012. Prices of maize and rice also edged up in October. 

“Tighter availability in global markets due to reduced harvests in major exporters, especially Canada, the Russian Federation, and the United States of America, continued to put upward pressure on prices,” FAO said of wheat. 

Wheat futures started November at new peaks, with U.S. prices at fresh highs since 2012 and Paris front-month futures at a record high as import demand remained brisk. 

In contrast, global sugar prices eased 1.8% in October, ending a run of six straight monthly rises, according to FAO. 

This decline was mainly the result of limited global import demand and prospects of large exportable supplies from India and Thailand as well as a weakening of the Brazilian real against the US dollar. 

Global cereal production forecast revised downwards

FAO has also cut its projection of global cereal production in 2021, to 2.793 billion tonnes from 2.800 billion estimated a month ago, as reduced wheat output estimates for Iran, Turkey and the United States, offset an increased forecast for coarse grain production. 

By contrast, global coarse grains output has been revised upwards but FAO notes that production would trail projected demand, leading to a fall in forecast cereal stocks.  

With demand threatening to outmatch cereal supply, the FAO now stresses that the world’s farmers must have access to seeds for more productive, nutritious, and climate-resilient crop varieties. 

Without good seeds, FAO casts doubt on the ability of farmers to produce the 50% more food needed for a global population predicted to reach ten billion by 2050.

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