- Food and Agriculture Organization of the United Nations (UN FAO) releases a monthly global food price index
- March’s reading showed a 1% year-on-year increase, the first advance after a sequence of five declines
- The UN FAO attributed part of this to higher energy prices thanks to the war in the Middle East
- Urea and fertiliser prices have subsequently surged
- Friday’s data for the month of April could give a further indication of the war’s impact
- The good news is March’s overall reading of 128.5 was a fifth below March 2022’s record high
“The Food and Agriculture Organization of the United Nations releases the latest reading for its monthly global food price index on Friday and economists, central bankers, politicians and consumers will all be watching it keenly, as they try to assess any potential knock-on effects from the war in the Middle East on the cost of living,” says AJ Bell investment director Russ Mould.
“Urea, fertiliser, and energy prices are all soaring and each could potentially put pressure on farmers and global food chains as an indirect result of the conflict.
“The good news is that the last index reading, which covered the month of March, showed just a 1% year-on-year increase in global food prices.
“Better still, the index reading of 128.5 sat way below the March 2022 record high of 160.2 that was reached in the immediate wake of Russia’s attack on Ukraine. The prospect of damage to fields and crops across Europe’s biggest breadbaskets, as well as reduced energy supply due to sanctions and the fighting, sent food prices soaring, with edible oils and cereals leading the way.
Source: Food and Agriculture Organization of the United Nations
“In this respect, there are differences between the two-month-old war in the Middle East and the ongoing conflict in Eastern Europe, in that crop production is not directly affected this time.
“Any aftereffects will be secondary and related to the availability and price of energy, especially diesel, and feedstocks for fertilisers. Damage to Qatar’s Ras Laffan liquified natural gas complex is particularly problematic, as LNG is a vital feedstock for urea, which itself is a key component of nitrogen-based fertilisers.
“The price of urea is almost double where it was at the start of 2026.
Source: LSEG Refinitiv data
“Spring represents a vital planting season in the northern hemisphere and surveys from the American Farm Bureau paint a gloomy picture, as 70% of 5,700 US farmers contacted in April asserted that they could not afford to buy all of the fertiliser they wanted, even allowing for some pre-booking.
“The UN FAO has already noted increases in global cereal prices thanks to expectations of reduced plantings in Australia and partly attributed spring’s increases in the prices of sunflower and rapeseed oils to higher energy prices.
“Even a speedy and peaceful resolution to the conflict in the Gulf may not be able to fix that and the risk of increased food prices in 2026 remains substantial, even if geopolitics and energy are not the only influences, with weather and crop yields also key influences. Drought in large sections of the USA is a notable concern here.
Source: Food and Agriculture Organization of the United Nations
“Edible oil prices were up 13% year-on-year in March while cereals were flat. Better news for consumers (if not farmers) came in the form of a 19% year-on-year drop in dairy prices, while sugar prices fell 21% year-on-year, a trend with which shareholders in Associated British Foods will be only too familiar.
“Even here the sugar price index rose month-on-month in March to its highest mark since September. The UN FAO explained this as the result of expectations that Brazil, the globe’s largest exporter, may switch toward increased consumption of sugar-based bioethanol fuels and away from petrol and diesel, and also worries over global sugar trade flows.
Source: Food and Agriculture Organization of the United Nations
“The index can be found here and the remaining releases for this year are scheduled for 8 May, 5 June, 3 July, 7 August, 4 September, 2 October, 6 November and 4 December.”
