Global Food Prices Remain Stable in November

Global food prices have stayed steady in November, as higher costs for sugar, vegetable oil, and dairy products offset lower prices for grains and meats. According to the United Nations' Food and Agriculture Organization (FAO), the food price index, which tracks global prices for staple foods, averaged 120.4 points in November, unchanged from the previous month.

Rising Costs and Concerns

While the lack of a price fall may worry policymakers trying to combat high inflation rates, it is worth noting that food prices are still 11% lower compared to the same period last year. The FAO reported that vegetable oil prices rose by 3.4% in November, with palm oil prices particularly increasing by 6% due to rising demand from importing countries. Dairy prices also experienced a 2.2% hike driven by an increased demand for skimmed milk powder and butter in Northeast Asia.

Challenging Market Conditions

Sugar prices saw a rise of 1.4%, reaching more than 41% higher than last year. The current supply of sugar is being threatened by severe dry weather conditions in Thailand and India, two leading sugar exporting nations. On the other hand, grain prices fell by 3% in November, primarily driven by a drop in coarse grain prices like corn. Wheat prices also experienced a decline of 2.4%, although recent reports of higher demand from China have led to rising futures prices in the market. Chicago futures have seen an increase of almost 18% this quarter, with prices trading at $6.39 per bushel.

Declining Meat Prices

In contrast to the overall trend, meat prices slipped by 0.4% in November, bringing prices down by 2.4% compared to last year.

Record Grain Production

On a positive note, the FAO is now forecasting record grain production this year, reaching 2.823 billion tons. This is an increase of approximately 10 million tons compared to the previous record set in 2021. The considerable growth in grain production can be attributed to bumper wheat crops in Russia and corn in the United States.