Over the past year, food prices have reached their highest point, and they are predicted to rise even further.

• Market watchers predict that some food baskets will continue to rise, as global food prices have recently hit an 18-month high.
• Since April 2023, the highest world food commodity prices have been recorded in October, according to the most recent data from the United Nations' Food and Agriculture Organization.

Market watchers predict that some food baskets will continue to rise, as global food prices have recently hit an 18-month high.

Since April 2023, the highest world food commodity prices have been recorded in October, according to the most recent data from the United Nations' Food and Agriculture Organization.

In October, the FAO Food Price Index increased by 2%, mainly due to a rise in vegetable oil prices.

Since January to October, the vegetable oils category experienced the largest price increase of 24%, driven by higher prices for palm, soy, sunflower, and rapeseed oils. The dairy category followed closely behind with a 17% rise, mainly due to the increase in cheese and butter prices. The meat category also saw a 10% increase since the beginning of the year.

The cereals category, which is mainly made up of wheat and rice, saw a 4.5% decline year over year. Sugar also experienced a nearly 5% drop. Analysts agreed that supply-side factors, such as weather and transportation difficulties, were the primary causes.

The index tracks commodity prices, not retail costs, but the rise indicates that higher food prices may persist in impacting consumers.

According to CNBC, industry experts predict that certain key food items will experience increased global demand in the upcoming year.

1. Palm oil and other vegetable oils

Next year, it is predicted that vegetable oil prices will increase substantially, with palm oil being the focus due to global demand exceeding supply limitations, according to Cheang Kang Wei, a physical agriculture broker at financial services firm StoneX.

BMI, Fitch Solutions' research unit, reported that the most recent El Nino weather phenomenon negatively impacted palm fruit cultivation in Indonesia, which is the world's largest palm oil producer and accounts for more than half of the global supply.

The country's palm oil association reports that domestic production decreased by nearly 5% in the first eight months of 2024 compared to the same period in the previous year.

Indonesia's push to increase the use of palm oil for biodiesel production is exacerbating the issue, according to Cheang, who spoke to CNBC.

As a result of supply challenges, rapeseed oil could also become more expensive, added the StoneX broker.

2. Beef

The drought in the U.S. southern plains has "severely reduced" the cattle herd, resulting in a surge in beef prices, according to Stephen Nicholson, a strategist at agribusiness bank Rabobank.

Cattle operations that rely on rainfall for feed production are vulnerable to drought, which can result in increased costs due to the need for additional feed or reduced herd size.

Among the top exporters of beef, the U.S. is also the world's largest producer of this meat.

Feeder cattle futures on the Chicago Mercantile Exchange increased by 16% to $2.59 per pound year-to-date, according to FactSet data. These young cattle are ready for fattening before slaughter. Rabobank and the U.K.'s Agriculture and Horticulture Development Board predict that global beef production will decline overall in 2025, which will keep prices high.

The world's four largest beef-producing countries will experience a decrease in herd contraction, resulting in the first global beef supply reduction since the Covid-19 pandemic, according to Rabobank's analysts in a recent report.

3. Coffee and cocoa

Matthew Biggin, a BMI commodities analyst, stated that the sugar, coffee, and cocoa markets experience more price uncertainty compared to other commodities.

The FAO index does not reflect the prices of coffee and cocoa, but these commodities face the "most risk," according to Biggin. A BMI report noted that unfavorable weather in key coffee producer Brazil has driven bullish sentiment in the market.

The price of coffee futures traded on ICE has increased by almost 70% year-to-date, reaching $3.18 per pound.

The heavy rain and low bean quality in Cote D'Ivoire, the largest cocoa producer, have caused concerns about cocoa prices. Additionally, challenging weather conditions and diseases have affected production in West Africa, which accounts for roughly 70% of global cocoa supply.

Despite a slight decrease in prices, cocoa futures continue to trade above average levels at $9,425 per metric ton on the U.S. Intercontinental Exchange.

Citi analysts predict that the likelihood of upside momentum returning in the next 2-3 months is high, with cocoa prices expected to reach $10,000 per ton within the next three months.

The price of chocolate has been influenced by the cost of cocoa, which is a crucial component in its production.

4. Fruits and vegetables

Fruit and vegetables would be "greatly impacted" by policies proposed by U.S. President-elect Trump, according to Bradley Rickard, a professor of food and agricultural economics in the Charles H. Dyson School of Applied Economics and Management.

If other policy changes affect the agricultural labor supply in the United States, it would further complicate the situation, said Rickard.

Trump announced plans to impose a 10% tariff on goods from China and a 25% duty for Canada and Mexico.

The U.S. in particular will be hit harder.

According to the U.S. Department of Agriculture's latest data, in 2022, Mexico was responsible for 69% of U.S. vegetable imports and 51% of U.S. fresh fruit imports.

The University of California, Davis reports that Mexico is a major supplier of various produce to the United States, including avocados, tomatoes, raspberries, bell peppers, and strawberries.

According to Rickard, the food items that will experience the greatest price hikes are those not produced locally.

The possibility of a renewed trade war with China, which could negatively impact agricultural trade, was discussed by Joseph Glauber, senior research fellow at the International Food Policy Research Institute, prior to Trump's inauguration in January.

If China retaliates, the prices of soybeans, poultry, and meat could become unstable, he stated.