Global food commodity prices rose for a second consecutive month in March, driven largely by higher energy costs linked to escalating conflict in the Near East, the Food and Agriculture Organisation of the United Nations said in its report released on Friday.

The FAO Food Price Index, a benchmark that tracks monthly changes in international prices of a basket of globally traded food commodities, averaged 128.5 points in March, representing a 2.4 per cent increase from February and standing 1.0 per cent higher than its level a year earlier.

“Price indices across all commodity groups, such as cereals, meat, dairy, vegetable oils, and sugar, rose to varying degrees, reflecting not only underlying market fundamentals but also responses to higher energy prices linked to the conflict escalation in the Near East. Compared to historical levels, the FFPI stood 1.2 points (1.0 per cent) above its value a year ago but remained as much as 31.7 points (19.8 per cent) below the peak reached in March 2022,” the report stated.

The FAO Vegetable Oil Price Index recorded one of the sharpest increases, rising 5.1 per cent month-on-month and standing 13.2 per cent above its level a year earlier. International quotations for palm, soybean, sunflower, and rapeseed oils all climbed, reflecting spillover effects from rising crude oil prices that made biofuel production more attractive.

Similarly, the FAO Sugar Price Index surged 7.2 per cent in March, as markets anticipated that Brazil, the world’s largest sugar exporter, would divert more sugarcane toward ethanol production to capitalise on higher energy prices.

This shift outweighed otherwise favourable global supply conditions supported by strong harvest progress in India and Thailand.

Cereal prices also moved higher, though more modestly. The FAO Cereal Price Index rose 1.5 per cent from February, mainly due to a 4.3 per cent increase in global wheat prices. The rise reflected deteriorating crop prospects in the United States caused by drought conditions and expectations of reduced wheat planting in Australia amid rising fertiliser costs.

Global maize prices edged slightly upward, as abundant global supplies helped offset concerns about fertiliser affordability and additional support from increased ethanol demand tied to higher energy markets.

Rice prices, however, moved in the opposite direction. The FAO All-Rice Price Index declined 3.0 per cent in March, driven by harvest timing, weaker import demand, and currency depreciations against the U.S. dollar in several importing countries.

Beyond crops, animal product markets showed mixed movements. The FAO Meat Price Index increased 1.0 per cent, supported by higher pig meat prices in the European Union ahead of seasonal demand and rising bovine meat prices in Brazil, where tighter cattle availability constrained exportable supplies. Prices for ovine and poultry meat declined, partly due to logistical disruptions limiting market access in the Near East.

The FAO Dairy Price Index rose 1.2 per cent, largely reflecting higher milk powder prices amid seasonal supply declines in Oceania. Cheese prices fell in the European Union due to higher production and weak export demand, but increased in Oceania, where supplies tightened.

FAO Chief Economist Máximo Torero warned that continued instability in the Middle East could further disrupt global food systems, particularly if energy supply routes are affected.

“If the conflict continues, it could eventually hit the supply of essential staples and push global prices higher,” Torero said, noting that energy markets remain deeply intertwined with food production costs.

He emphasised the strategic importance of the Strait of Hormuz, through which a significant share of the world’s fuel and fertiliser shipments pass. A prolonged disruption in the corridor, he said, could force farmers worldwide to reconsider planting decisions due to higher input costs and uncertain supply availability.

According to Torero, countries already struggling with high debt burdens face the greatest risk, as rising import costs may compel governments to reduce food purchases or shift toward lower-quality supplies, potentially worsening food insecurity.

To mitigate future shocks, the FAO recommended a multi-layered policy response. In the short term, countries should secure alternative trade routes for agricultural inputs, safeguard humanitarian supply chains, and strengthen social safety nets for vulnerable populations.

For longer-term resilience, the agency urged investments in storage and transport infrastructure and called for innovation in fertiliser use to improve efficiency and protect global food production from recurring disruptions.