here’s what may get more expensive

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Global food prices recently rose to an 18-month high, with some food baskets expected to continue climbing, according to market watchers. 

In October, world food commodity prices were at their highest since April 2023, according to the most recent data compiled by the United Nations’ Food and Agriculture Organization.

The FAO Food Price Index, which monitors the prices of five food baskets: grains, meat, dairy, vegetable oils and sugar, rose by 2% in October, driven primarily by a surge in vegetable oil prices.

From January to October, the vegetable oils category had the largest price spike, jumping 24% on the back of higher prices for palm, soy, sunflower, and rapeseed oils. That was followed by FAO’s dairy category, which rose 17% from the start of the year, led by cheese and butter prices. The gauge’s meat category increased 10% since the start of the year. 

Conversely, the cereals category, which largely comprises wheat and rice, dipped 4.5%, while sugar declined almost 5% year on year. Supply-side factors, ranging from weather to transportation challenges, have been the main drivers, analysts concurred.

The index measures raw commodity prices rather than retail costs, but the increase suggests that higher food prices may continue to affect consumers.

Here are some key food items that could see more climbs globally in the year ahead, according to industry experts who spoke to CNBC.

1. Palm oil and other vegetable oils

Vegetable oil prices are expected to rise significantly next year, with palm oil in the spotlight as higher global demand meets supply constraints, said Cheang Kang Wei, a physical agriculture broker at financial services firm StoneX.

The most recent El Nino weather phenomenon affected palm fruit cultivation in Indonesia, which is the largest palm oil producer and accounts for over half of the world’s supply, Fitch Solutions’ research unit BMI wrote in a report.

According to the country’s palm oil association, domestic production in the first eight months of 2024 saw an almost 5% drop from the same period last year. 

“This is compounded by Indonesia’s push to use more palm oil for biodiesel production, which is further tightening supply,” Cheang told CNBC. 

Other vegetable oils, such as rapeseed oil, could also become more expensive as a result of similar supply challenges, added the StoneX broker.

2. Beef

Beef prices have surged as a result of the drought in the U.S. southern plains, which have “severely reduced” the cattle herd, said Stephen Nicholson, a strategist at agribusiness bank Rabobank.

Beef cattle operations that depend on rainfall to produce feed for their herds are susceptible to drought. During dry periods when forage production and availability for cattle feed decline, producers often need to purchase additional feed, or decrease the size of their herds — leading to higher costs.

The U.S. is the largest producer of beef in the world and among the top exporters.  

Angus beef steaks and top sirloin fillets for sale in a Sprouts Farmers Market grocery store in Redondo Beach, California, on Feb. 23, 2024.

Patrick T. Fallon | AFP | Getty Images

Feeder cattle futures traded on the Chicago Mercantile Exchange rose 16% to $2.59 per pound year-to-date, data from FactSet showed. Feeder cattle are young cattle that are mature enough to be fattened for slaughter.

Rabobank and the U.K.’s Agriculture and Horticulture Development Board both expect that the overall decline in global beef production will keep prices elevated in 2025.  

“Herd contraction in the world’s four largest beef producing countries will lead to the first global beef supply reductions since the Covid-19 pandemic,” Rabobank’s analysts wrote in a recent report

3. Coffee and cocoa

The sugar, coffee and cocoa markets face greater price uncertainty than other commodities, said BMI commodities analyst Matthew Biggin. 

While coffee and cocoa prices are not reflected in the FAO index, prices of the two commodities face the “most risk,” said Biggin. Unfavorable weather in key coffee producer Brazil has driven bullish sentiment in the market, noted a BMI report.

Coffee futures traded on ICE have jumped almost 70% year-to-date to $3.18 per pound.

A tray of chocolate.

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For cocoa, concerns about heavy rain and low bean quality in largest producer Cote D’Ivoire have also placed upward pressure on cocoa prices. Challenging weather conditions and diseases have affected production in West Africa, which accounts for roughly 70% of global cocoa supply. 

Though prices have tapered slightly from the record highs, cocoa futures still remain above typical levels, trading at $9,425 per metric ton in the U.S. Intercontinental Exchange. 

“The risk for upside momentum to re-emerge in the next 2-3 months is high,” Citi analysts said, expecting cocoa prices to rise to $10,000 per ton within the next three months.

Cocoa is a key ingredient in chocolate, and prices of the beloved treat have in turn been affected.

4. Fruits and vegetables

A category that would be “greatly impacted” by policies proposed by U.S. President-elect Trump would be fruit and vegetables, said Bradley Rickard, a professor of food and agricultural economics in the Charles H. Dyson School of Applied Economics and Management.

“And this would be further complicated if other policy changes affect the agricultural labor supply in the United States,” said Rickard.

Trump recently said he will impose an additional 10% tariff on goods from China and a 25% duty for Canada and Mexico.

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

In 2022, Mexico accounted for 69% of U.S. vegetable imports and 51% of U.S. fresh fruit imports, according to latest data by the U.S. Department of Agriculture.

Mexico is a key supplier of a range of produce to the United States, including avocados, tomatoes, raspberries, bell peppers, and strawberries, according to data from the University of California, Davis.

“The food items that would see the biggest price increases are those that are not produced domestically,” added Rickard. 

When Trump takes office in January, there may be a “renewed trade war” with China, which could be very disruptive for agricultural trade, said Joseph Glauber, senior research fellow at the International Food Policy Research Institute.

Soybeans, poultry and meat prices could be volatile if China retaliates, he added.

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