Wars, droughts, trade rows push world food prices to four-year high
Extreme weather and supply disruptions caused by wars are unsettling farm markets.
Wars in Ukraine and Iran, along with heatwaves across Europe, are pushing grain prices to three-year highs.
PARIS – World food prices climbed in August to the highest since the end of 2022, as escalating geopolitical tensions and extreme weather deepen concerns over supplies from key producing regions.
The United Nations’ index of food-commodity prices climbed 1.9 per cent from July, led by grains, sugar and dairy, according to a report from the Food and Agriculture Organization (FAO) on Sept 4.
The FAO food price index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 133.3 points in August, up from July’s revised reading of 130.8.
That was the highest score since November 2022, though nearly 17 per cent below a record peak from March 2022, after Russia’s full-scale invasion of Ukraine .
Extreme heat and drought in Europe, the threat of a severe El Nino weather pattern and trade upheaval caused by the Ukraine and Iran wars have unsettled agricultural markets, pushing grain prices to three-year highs and sugar to a one-year peak.
“August’s increase in global food prices is a warning that the risk premium is returning to food markets. Climate shocks, geopolitical tensions and disrupted trade logistics are converging to tighten supply expectations,” FAO chief economist Maximo Torero said in a statement.
Tensions in the Black Sea breadbasket have escalated since mid-July, with Russia preparing to step up attacks on Ukraine, where farmers are struggling to export grain.
Hopes are also dimming for a peace deal between the United States and Iran, while poor harvests in Europe could leave the continent more reliant on imports, potentially intensifying competition for supplies.
Global wheat prices rose 2.6 per cent in August, while sugar jumped 11.9 per cent.
The FAO index tracks internationally traded food commodities, meaning it can take time for price changes to reach supermarket shelves.
Other warning signs are also emerging.
Futures of key crop staples like wheat and corn have climbed to multi-year highs. The Bloomberg Agriculture Spot Index, which tracks 10 major products, rose more than 13 per cent in August, its steepest gain since July 2012.
The threat of an unusually powerful El Nino means weather risks are unlikely to fade anytime soon, keeping global food markets vulnerable to another inflationary shock. BLOOMBERG, REUTERS