WANDILE SIHLOBO | Global food prices inch up but crisis not imminent

SA still experiences mild food price inflation, with the latest print easing to 3.4% in March 2026 (from 3.7% in February).

However, fears of higher food prices continue to linger internationally.

The underpinning factor behind the likely surge in prices globally is the disruption to agricultural activity due to the Middle East war’s impact on fuel and fertiliser supplies and prices.

There also remain concerns about the likely negative impact of the El Nino on global agricultural production in the 2026/2027 season.

These matters, however, remain part of possible negative outcomes in the months ahead.

At present, general agricultural supplies are solid globally and domestically.

Consequently, global agricultural prices have nudged up a bit, though not as dramatically as some may have anticipated.

For example, the Food and Agriculture Organisation of the UN’s (FAO) global Food Price Index nudged up mildly in April 2026.

This Food Price Index mainly measures the monthly change in international prices of a basket of agricultural commodities, not actual retail prices.

The FAO Food Price Index averaged 130.7 points in April, up 2% from its revised March level.

This marked the third consecutive monthly increase.

The underlying factors were mainly the prices of vegetable oils, meat and cereals.

Meanwhile, other products have generally eased.

From an annual perspective, the FAO Food Price Index is 2% higher than a year ago, reflecting fears about the uncertain path ahead.

Still, we are nowhere closer to the levels we saw in March 2022, after the start of the Russia-Ukraine war.

The FAO Food Price Index is still 18% down from the highs of March 2022.

Global grain prices are likely to remain at lower levels than during the Russia-Ukraine war shock for some time.

Some may wonder why the current shock is different from the 2022 highs, which saw a surge in grain and fertiliser prices.

Two things are different from the 2022 Black Sea war.

First, there are currently ample global grain supplies, which are adding significant downward pressure on prices.

For example, in its March 2026 report, the International Grains Council (IGC) placed the 2025/2026 global grains and oilseed production at 2.5-billion tonnes, up 9% from a year ago.

These include maize, wheat, soybean and rice, among major grains and oilseeds.

If we zoom in on wheat, the 2025/2026 global harvest was a record 845-million tonnes, underpinned by ample harvests across major producing regions such as the EU, Russia, the US, Canada, Australia, Ukraine, China and India, among other countries.

The 2025/2026 global maize harvest is estimated at 1.3-billion tonnes, up 6% from the previous season.

The large harvests in the US, Brazil, Argentina, Ukraine, China, India and SA boosted this number.

We saw similar harvest conditions in rice, with the IGC placing the 2025/2026 global rice harvest at a record 544-million tonnes.

This large harvest was supported mainly by India, China, Bangladesh and Vietnam, among other countries.

In soybeans, the harvest for the 2025/2026 season is well above average, at 426-million tonnes, on the back of large harvests in the US, Brazil, Argentina, China and Paraguay, among other regions.

The 2025/2026 sunflower seed yield was also robust, at 56-million tonnes, up 8% from the previous season, driven by large harvests in Russia, Ukraine, the EU, Argentina, Kazakhstan and SA.

These are not the only agricultural value chains that saw a robust harvest.

There were also ample harvests of various fruit and nuts across major producing countries worldwide.

Second, the Middle East is not a major grain-producing region but an importer; therefore, a war at a time when we have ample grain supplies is unlikely to lead to an immediate increase in grain prices.

But the impact of the war on the fertiliser market will likely weigh on the 2026/2027 agricultural season.

The impact of this challenge will be more apparent in 2027, going into 2028.

We are not as concerned about the supplies currently, but about the path ahead, depending, of course, on the outcomes of the 2026/2027 season.

We will only start to worry about the impact of this on global grain prices if the war continues for longer and starts to affect fertiliser usage in the upcoming season.

However, higher fertiliser and fuel prices, which remain a key risk, are driving global food price concerns.

But the higher fertiliser prices will matter more in 2027, on the back of the 2026/2027 season.

Farmers in the northern hemisphere have recently started planting the new season’s crop, and in the southern hemisphere, we will only start in October 2026.

If higher fertiliser prices lead to a reduction in planted area, we will start to worry more about grain prices in late 2027 and into 2028, and this will only start to become clear from mid-year onwards.

Wandile Sihlobo is the chief economist of the Agricultural Business Chamber of SA.

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