World food price rise set to continue if Iran war lasts, FAO says

World food prices surged in March, reaching their highest point since September 2022. This increase could continue if the ongoing conflict in the Middle East, which has raised energy prices, persists, according to a statement from the United Nations Food and Agriculture Organization (FAO) released on Friday. FAO Chief Economist Maximo Torero noted that the price hikes since the conflict started have been relatively small. They are mainly influenced by rising oil prices but have been somewhat balanced by strong global cereal supplies. However, Torero warned that if the conflict extends beyond 40 days and production costs stay high, farmers might cut back on their inputs, plant less, or switch to crops that require less fertilizer. These decisions could negatively impact future crop yields and affect food supply and commodity prices for the remainder of this year and into next year. The FAO Food Price Index, which tracks price changes in a selection of worldwide food commodities, increased by 2.4% compared to its revised figure from February. It is now 1% higher than a year ago but remains nearly 20% below the peak seen in March 2022, following the beginning of the war in Ukraine. The cereal price index rose by 1.5% from the previous month, driven by a 4.3% increase in international wheat prices due to worsening crop forecasts in the U.S. and expectations for lower plantings in Australia because of high fertilizer costs. Global maize prices increased slightly, helped by a strong global supply that countered concerns about fertilizer expenses and higher energy prices boosting ethanol demand. Meanwhile, rice prices fell by 3.0% due to the timing of harvests and lower import demand.