Global Price of a Basket of Groceries Hits Two-Year Low

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World food prices dropped in November to their lowest level since May 2016, as measured by the FAO Food Price Index. That’s good news, according to the UN agency, since global food indexes can serve as a proxy for food security among the global population. The FAO index, which stood at 160.8 points in November, covers a basket of various agricultural commodities including meat, cereals, sugar, dairy, and oilseeds. The index’s dip of 1.3 percent in November from October was primarily driven by falling vegetable oil, dairy, and cereal prices, and was marginally offset by rising sugar prices.

Other indexes, including ones from the World Bank and the International Grain Council, broadly concur with the downward drift in global food prices, and also provide greater perspective on movements of individual commodities. A closer look at data provided by the grain council, for instance, shows that falling corn and rice prices over the past six months explain the overall decline in the cereals group. Barley prices, in contrast, have risen sharply in that period, and wheat prices, despite fluctuations, are more or less unchanged from May levels.

While food prices are relatively stable at the moment, Rabobank, a big food and agribusiness financier, warned in a recent report that trade wars, livestock disease, and unpredictable El Niño weather events could bring risks for food security in 2019. Gro Intelligence subscribers track the latest changes in price data on a host of commodities.

The chart on the left shows the weekly change over time of various grains on the IGC commodity price index, which is a standardized measure of change in the price of a single commodity or a group of commodities over time. The chart on the right shows the monthly change in the World Bank food index, which measures the price of food. This price data, which uses 2010 as the base year, includes commodities like fats and oils, grains, and other food items.

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