Global Food Prices Climb Again as Drought and Freight Costs Bite

Global food prices rose again over the past month, with cereals and vegetable oils leading the increase as drought in several major producing regions combined with higher freight and insurance costs to tighten supply.

Analysts said the rise is being driven as much by the cost of moving food as by the cost of growing it, with disruption to Gulf shipping routes pushing up rates on long-haul cargoes.

HARVESTS

Yields in parts of southern Europe and North Africa have been cut by heat and water shortage, while exportable surpluses in several Black Sea and South Asian producers are smaller than last year. Rice export restrictions in some markets have added to price pressure.

IMPORT-DEPENDENT ECONOMIES

The effect falls hardest on countries that import most of their staple grain and pay for it in dollars. Aid agencies warn that food assistance budgets are buying materially less than a year ago.

OUTLOOK

Forecasters expect prices to stay elevated through the northern hemisphere autumn, with the main variable being whether shipping disruption eases.

VERIFIED SNAPSHOT

Direction: prices up month on month. Leading categories: cereals and vegetable oils. Drivers: drought-hit yields, export restrictions, freight and insurance costs.