The United Nations Food and Agriculture Organization has lowered its forecast for global cereal production in 2026 by 3.4 million tonnes compared to its July estimates. The organization now expects harvests of 2.98 billion tonnes, which would represent a 2 percent decline year‑on‑year and would be the largest annual drop in production since 2018. Despite this revision, this year’s harvest would still be the second highest on record. The main reason for the downward revision is the deteriorating outlook for corn production, with global corn harvests now estimated at 1.309 billion tonnes, 0.6 percent less than previously forecast.
The revision is mainly due to worsening growing conditions in the European Union, where persistent summer heat and drought, particularly in France and Poland, led to expected yields falling below the five‑year average. Forecasts for India and Paraguay were also lowered. The negative changes were partially offset by better harvest prospects in Argentina and Brazil, where favourable weather conditions supported above‑average corn yields.
At the same time, FAO raised its forecast for global wheat production by 4.2 million tonnes, or 0.5 percent, to 810.7 million tonnes. Despite the upward revision, this result would still be 3.8 percent lower than last year’s level, but would still represent the second highest outcome on record. The increase in wheat forecasts is due to better‑than‑expected harvests in some regions, which partially offset declines in other parts of the world.
The FAO Food Price Index rose in August to 133.3 points from 130.8 points after revision in July, an increase of 1.9 percent month‑on‑month. The index was 2.5 percent higher than a year earlier, but remained 16.8 percent below the historic peak reached in March 2022. Increases were recorded across all major commodity groups monitored by FAO. Sugar prices rose the most, with the FAO Sugar Price Index increasing by 11.9 percent month‑on‑month to 106.4 points, reaching its highest level since June 2025.
Prices on the rise
The organization indicated that the sugar market was reacting to deteriorating global supply prospects for the 2026/27 season. Production expectations were negatively affected by persistent high temperatures and drought in the European Union, adverse weather conditions linked to El Niño in Asian countries and lower production in the key sugar cane growing region of central‑southern Brazil. An additional upward factor was India’s decision to allow duty‑free imports of raw sugar.
Cereal prices also recorded strong gains. The FAO Cereal Price Index rose 2.2 percent month‑on‑month to 116.3 points, reaching its highest level since May 2024. Prices of all major cereal grains rose under the influence of strong demand, crop concerns due to adverse weather conditions in major producing regions and continued uncertainty over Black Sea exports. Wheat prices rose 2.6 percent month‑on‑month and were 15 percent higher than a year ago. Corn prices increased by 2.5 percent, supported by concerns over yields in the US Corn Belt and weaker production prospects in the European Union.
The FAO Vegetable Oil Price Index rose 0.6 percent month‑on‑month to 196.9 points, marking its third consecutive monthly increase and reaching its highest level since June 2022. The increase was driven by higher palm and soybean oil prices. Palm oil prices were supported by strong import demand and concerns about the impact of El Niño on production in Southeast Asia. At the same time, sunflower and rapeseed oil prices fell slightly due to expectations of ample supply in the 2026/27 season.
Meat and dairy
Meat prices also rose in August. The FAO Meat Price Index increased by 1 percent month‑on‑month to 127.9 points. Prices of poultry, pig meat and sheep meat were higher. Poultry prices were supported by a recovery in Brazilian exports amid continued strong global demand. Pig meat prices rose mainly in the European Union, where high temperatures slowed animal growth rates and reduced the availability of slaughter‑ready stock. The only meat category to decline was beef.
The FAO Dairy Price Index rose 2.3 percent month‑on‑month to 119.2 points, recording its first increase after four months of declines. The rise was driven by higher prices for skimmed and whole milk powder and cheese. FAO noted that in the European Union, limited milk supply, further exacerbated by hot and dry weather in some producing regions, supported higher dairy product prices.
FAO assessed that the August increase in the food price index was broad‑based and covered all monitored commodity groups, but the main source of price pressure remains concerns about global agricultural supply due to adverse weather conditions and disruptions in international trade. This year’s 2 percent decline in cereal production, although the largest since 2018, does not rule out the second‑best result on record, but rising prices across all food categories point to mounting pressure on the global food system.
Particularly worrying are the forecasts for the European Union, where drought and heat are hitting key crops, and for Asian countries affected by El Niño. The coming months will show whether these trends continue and whether global markets can avoid more serious disruptions to food supplies.
In addition, uncertainty over Black Sea exports and trade decisions by individual countries, such as India’s sugar import policy, will influence further food price developments on global markets. FAO will regularly update its forecasts as new data on harvests and weather conditions in the world’s main producing regions becomes available.
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