Commodities & Metals

Global Food Prices Spike Higher in November

The Food and Agriculture Organization of the United Nations tracks food prices worldwide. Those prices spiked in November, another challenge to the efforts to feed the world’s hungry.

The organization said the price level reached its highest point in two years. It blamed a sharp rise in the cost of meat and vegetable oils. This was partially offset by a drop in cereal prices. The report showed, “The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 177.2 points over the month, up 2.7 percent from October and 9.5 percent from the same period a year earlier.” The Vegetable Oil Price Index was up 10.4% last month compared to October. The Meat Price Index was higher by 4.6% for the same period, which was described as the largest surge in a decade. Both increases were more demand-based that due to supply constraints.

The FAO Cereal Price Index fell 1.2%, largely because of a rise in production by the large wheat-producing nations. Strong harvests are expected to extend this trend, at least through the end of the year.

The worst news from the report was in the quarterly Crop Prospects and Food Situation. Drought will make the availability of food in over 40 nations more difficult. One reason is drought throughout much of Africa. Many of these areas already have faced permanent challenges to producing enough food to feed their populations.

The food price spike comes at a time when two other factors represent high hurdles. The first is that global warming has had an impact on the ability to successfully plant and harvest crops. This is due, ironically, to a combination of drought and flooding.

Rising food prices are also happening as a possible recession has hit some parts of the world. This may compromise the ability to buy food there.

While these problems are not a perfect storm for food shortages, they are certainly a sign of difficulty.