World food prices hit new 10-year high in October

World food prices rose for a third straight month in October to reach a fresh 10-year peak, led again by increases in cereals and vegetable oils, the UN food agency said on Thursday.

The Food and Agriculture Organization’s (FAO) food price index, which tracks international prices of the most globally traded food commodities, averaged 133.2 points last month compared with a revised 129.2 for September.

The September figure was previously given as 130.0.

The October reading was the highest for the index since July 2011. On a year-on-year basis, the index was up 31.3 per cent in October.

Agricultural commodity prices have risen steeply in the past year, driven by harvest setbacks and strong demand.

The FAO’s cereal price index rose by 3.2 per cent in October from the previous month. That was led by a 5 per cent jump in wheat prices, which climbed for a fifth consecutive month to reach their highest since November 2012, FAO said.

“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 US prices at fresh highs since 2012 and Paris front-month futures at a record high as import demand remained brisk.

World vegetable oil prices jumped 9.6 per cent on the month to set a record high, supported by further strength in palm oil prices as labour shortages in Malaysia continued to hamper production, FAO said.

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

Rome-based FAO cut its projection of global cereal production in 2021, to 2.793 billion tonnes from 2.800 billion estimated a month ago, according to its cereal supply and demand outlook.

That mainly reflected reduced wheat output estimates for Iran, Turkey and the US, offsetting an increased forecast for coarse grain production.

Expected world cereal output would still represent a record, but would trail projected demand, leading to a fall in forecast cereal stocks, FAO said.

Demand was supported by a raised projection of global cereal trade to a new record, bolstered by increased wheat trade.