Global food prices surge to 3-year high on Iran war, says FAO

Global food prices in April rose to the highest in more than three years, driven by the Iran war, according to the United Nations’ Food and Agriculture Organisation (FAO).

The FAO food price index, which tracks monthly changes in the international prices of a set of globally traded food commodities, rose for a third consecutive month in April to average 130.7 points, the UN agency said, up 1.6 percent from its ​revised March level and the highest since February 2023.

The April food index increased by two percent year-on-year as higher crude oil prices drove demand for seed oils used in biofuels, while concerns over weaker production in Asia also elevated prices.

The FAO’s April vegetable oil price index rose 5.9 percent month-on-month to its highest level since July 2022, as a result of increased prices for soy, sunflower, rapeseed oil, and palm oil, the latter notably underpinned by biofuels policy incentives.

Máximo Torero, FAO’s chief economist, said vegetable oil prices are being driven by elevated energy costs that, in turn, are raising demand for biofuels made using organic materials, such as oil-rich plants.

Torero noted that despite the disruptions linked to the Iran war, global agrifood systems have continued to show resilience. He added that cereal prices have increased only moderately owing to strong stocks and adequate supplies from previous seasons.

FAO reported that the cereal price index rose by 0.8 percent from March, up 0.4 percent year-on-year, reflecting higher prices across major cereals, except sorghum and barley.

World wheat prices increased by 0.8 percent, due to concerns over drought in parts of the United States of America and a higher likelihood of below-average rainfall in Australia.

The increase was further reinforced by expectations of reduced wheat plantings in 2026, with farmers moving to less fertiliser‑intensive crops amid high fertilizer prices – driven by elevated energy costs and disruptions associated with the effective closure of the Strait of Hormuz, the report said.

Maize prices increased by 0.7 percent. FAO pins the increase on seasonally tighter supplies and weather-related concerns in Brazil, as well as dry conditions affecting sowing in parts of the United States of America.

It added that the pressure on maize prices came from firm ethanol demand amid elevated crude oil prices and ongoing concerns over fertilizer affordability.

By contrast, world sorghum prices dropped by 4.0 percent, largely due to weaker global import demand and improved supply prospects in key producing and exporting countries.

FAO also reported that the rice index rose by 1.9 percent in April, driven by higher Indica and fragrant rice prices, reflecting increased production and marketing costs in most rice-exporting countries following the surge in prices of crude oil and its derivatives.