The FAO has warned the “risk premium” is building in food as its index tracking five commodities reached an almost four-year high in August.
The Food and Agriculture Organization of the United Nations’ headline food price index averaged 133.3 points in the month.
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That marked its strongest reading since November 2022, although still 16.8% below the all-time high seen in March of the same year, the FAO’s records show.
The index in August climbed 1.9% from the revised July reading and was 2.5% higher than the same month last year.
“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, showing that resilience, open trade and secure input flows are now central to global food-price stability,” Maximo Torero, the chief economist of the FAO, said in a statement today (4 September).
All five commodity groups tracked by the index – cereals, vegetable oils, meat, dairy and sugar – posted gains in August.
The growth was sharpest in sugar, which saw its index surge 11.9% from July to 106.4 points, the highest since June 2025.
This reflected expected lower sugarbeet yields in the EU, El Niño concerns in key Asian producers, lower output in Brazil, and India’s announcement of duty-free raw sugar imports.
The price index for dairy rose 2.3% from July to 119.2 points, mainly due to “tightening” milk supplies in the EU.
The cereal index averaged 116.3 points in August, up 2.2% from the prior month and the highest level since May 2024. The FAO said the increase was due to “robust” demand, poor weather for crops, and export “uncertainties” from the Black Sea, namely disruptions to shipments from Ukraine.
Prices rose for major grains like wheat, maize and rice.
The price index for vegetable oil rose 0.6% month-on-month to 196.9 as palm and soy oil prices strengthened due to global import demand and concerns about El Niño-related conditions in South East Asia.
Rapeseed and sunflower oil prices slipped “slightly” on expectations of ample supplies, as per the agency’s findings.
The meat index rose 1% to 127.9 points, with poultry, pig and ovine meat prices all rising.
Pig meat gained as high temperatures slowed animal “growth” in the EU, while bovine meat prices fell as Chinese import-quota allocations intensified competition among exporters in Brazil and Australia.
Separately, the FAO cut its 2026 global cereal production forecast by 2% to 2.98 billion tonnes, although that would still be the second-largest harvest on record.
