FAO: Middle East conflict pushes up global food prices with far-reaching impacts

The United Nations Food and Agriculture Organization (FAO) said Friday that global food prices rose to the highest level since last September in March, driven by higher energy prices and increased shipping costs as a result of the conflict in the Middle East; if the fighting continues, food prices could move further higher.

FAO Chief Economist Maximo Torero said in a statement that, “Since the outbreak of the conflict, the overall extent of price increases has been moderate, mainly driven by higher oil prices, while ample global grain supplies have, to some extent, helped cushion the impact.”

But he warned that if the conflict lasts more than 40 days and agricultural input costs remain high, farmers may cut back on investment, reduce planting areas, or shift to crops that require less reliance on fertilizers.

He added, “These choices will affect future crop yields and will have far-reaching impacts on the remainder of this year and next year’s food supply and commodity prices.”

Data show that in March, the FAO food price index was 128.5 points, up 2.4% month-on-month, marking the second consecutive month of increases, and up 1.0% compared with the same period last year.

Although the index tracks the costs of raw-material commodity inputs rather than retail prices, this rise sends a signal: as the Middle East conflict pushes up energy and fertilizer costs and disrupts the flow of grains and key agricultural inputs through the Strait of Hormuz, food inflation may persist.

Rising fertilizer costs may suppress planting incentives

The grain price index rose 1.5% month-on-month, including a 4.3% increase in international wheat prices, mainly driven by expectations that U.S. crop prospects have deteriorated and that Australia may reduce planting areas due to rising fertilizer costs.

Global corn prices edged up slightly; ample global supply offset, to some extent, concerns arising from higher fertilizer costs. At the same time, higher energy prices are lifting expectations for ethanol demand, which also provides indirect support for corn prices.

Rice prices fell 3.0%, mainly due to harvest-cycle factors and weaker import demand.

Plant-based oil prices rose 5.1%, marking the third consecutive month of increases. Prices of palm oil, soybean oil, sunflower oil, and rapeseed oil moved higher, reflecting expectations of rising global energy prices and stronger demand for biofuels.

Among them, palm oil prices climbed to the highest level since mid-2022.

Sugar prices rose 7.2% in March, reaching a new high since October 2025, due to higher crude oil prices raising market expectations. As the world’s largest sugar exporter, Brazil may divert more sugarcane to ethanol production rather than to sugar.

Meat prices rose 1.0%, mainly driven by higher EU pork prices and higher Brazilian beef prices, while poultry meat prices fell slightly.

In another report, the FAO slightly raised its forecast for 2025 global grain output to 3.036 billion tons, expecting a year-on-year increase of 5.8%, which would set a record high.

(Source: Caixin Finance and Economics)