FAO Food Price Index Hits Four-Year High Amid Supply Shocks

The United Nations Food and Agriculture Organization (FAO) reported that world food prices rose to their highest level in nearly four years in August, according to new data. The FAO's Food Price Index averaged 133.3 points, up 1.9% from July and 2.5% higher than a year earlier.

The increase reflects a combination of supply shocks, including droughts and extreme heat affecting crop prospects across Europe, the ongoing war in Ukraine disrupting grain shipments through the Black Sea, and severe disruptions to shipping through the Strait of Hormuz amid the conflict in the Gulf.

As a result, wheat prices rose 2.6% in August and now sit 15% above where they were a year ago, while sugar jumped 11.9%, the sharpest gain in the basket.

For North American investors, fertilizer producers such as Nutrien, Mosaic, and CF Industries may see firmer pricing when grain costs rise, but their own natural gas and energy costs are climbing too.