What about grocery bills… Middle East war puts global food prices on 'high alert'

The global food price index released by the UN Food and Agriculture Organization (FAO) continued its upward trend last month.

South Korea’s Ministry of Agriculture, Food and Rural Affairs said on the 4th that last month’s food price index came in at 128.5, up 2.4% from the previous month. The index compares prices against the 2014–2016 average set at 100.

After falling for five consecutive months through January, the index rebounded in February and maintained its upward momentum in March. Prices for major items—cereals, vegetable oils, meat, dairy and sugar—all rose.

The cereals price index rose 1.5% from the previous month to 110.4. International wheat prices climbed 4.3% as expectations of reduced planting—driven by drought in the United States and concerns over rising fertilizer prices in Australia—were priced in. Corn had factors such as higher fertilizer cost burdens and increased ethanol demand due to rising energy prices, but with supplies relatively ample, the gain was limited to 0.9%.

The meat price index rose 1.0% from the previous month to 127.7. Pork prices led the rise on seasonally stronger demand in the European Union, while beef prices also increased as export volumes from Brazil declined. Chicken, however, edged down slightly as supplies in Brazil were sufficient.

The dairy price index rose 1.2% to 119.4. It rebounded from a downtrend that had continued since July last year, supported by gains in skim milk powder, whole milk powder and butter.

Vegetable oils and sugar posted relatively large increases. The vegetable oils price index rose 5.1% from the previous month to 183.1. Palm oil prices hit their highest level since mid-2022 on the back of higher international crude prices and lower output in Malaysia. Sunflower oil and rapeseed oil also rose on supply constraints in the Black Sea region and expectations of stronger demand.

The sugar price index jumped 7.2% from the previous month to 92.4. The rise reflected expectations that Brazil would divert more sugarcane to ethanol production rather than sugar as international crude prices climb. Concerns over trade disruptions stemming from conflict in the Middle East also contributed to upward pressure.

By Hyunbo Shin, Hankyung.com reporter greaterfool@hankyung.com