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March 17, 2025 | 05:29 am
TEMPO.CO, Jakarta - Global food commodity prices experienced an increase in February, triggered by the rising prices of sugar, dairy products, and vegetable oil, according to a report by the Food and Agriculture Organization (FAO) of the United Nations on Friday, March 7, 2025.
As reported by Reuters, the FAO Food Price Index, which measures the monthly changes in international prices of a basket of food commodities traded globally, recorded 127.1 points last month, an increase of 1.6% compared to January and an 8.2% increase compared to February 2024.
The surge in prices is mainly caused by the increase in sugar prices, which rose by 6.6% in a month. This increase is driven by concerns over the increasingly tight global supply for the 2024/2025 season, mostly influenced by unfavorable weather conditions in Brazil.
Dairy product prices increased by 4% compared to January. All major dairy products experienced price increases, mostly due to very high import demand. This demand exceeded production capacities in some major exporting regions, thus contributing to the surge in prices in the global market.
Meanwhile, vegetable oil prices also rose, with a 2% monthly increase and a staggering 29.1% increase compared to the same period last year. The price increase is mainly caused by the soaring prices of palm oil, soybean oil, and sunflower oil. The main factor driving this increase is the limited supply in the Southeast Asia region, exacerbated by high demand from the continuously growing biodiesel industry.
In the cereal sector, the price index monitored by the FAO showed a slight increase of 0.7% compared to the previous month.
Wheat prices experienced a significant increase due to reduced supplies in Russia. Additionally, concerns about farming conditions in some major wheat-producing regions, such as Eastern Europe and North America, also added pressure to the commodity prices.
As for corn, prices continued to trend upwards. This is due to the increasingly limited supply in Brazil and high export demand from the United States, causing global corn prices to continue rising.
Conversely, the rice market showed a declining trend. In February, global rice prices recorded a decrease of 6.8%. This decline contrasts with the upward trend in other food commodities, indicating that the supply and demand factors for rice tend to be more stable compared to other cereals.
In a separate report, the FAO estimated a moderate increase in global wheat production in 2025, projected to reach 796 million tons, about 1% higher than the previous year.
This growth is supported by the forecasted increase in production in the European Union, especially in France and Germany.
However, the FAO warned that several challenges could affect harvest results, such as drought conditions in Eastern Europe and excessive rainfall in Western Europe.
Meanwhile, in the United States, the wheat acreage is expected to increase, but the per hectare yield is likely to decrease due to ongoing drought conditions.
Global rice production is predicted to reach a record high of 543 million tons in the 2024/25 season. This increase is driven by various factors, including promising harvest prospects in India, which is one of the largest rice producers in the world. Additionally, highly supportive growth conditions in several Southeast Asian countries, particularly in Cambodia and Myanmar, also contributed to this surge in production.
On the other hand, the FAO has also revised its projection for global cereal production for the year 2024. The agency now projects that total global cereal production will reach 2.842 billion tons, a slightly higher figure compared to the production level in 2023.
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