War Blocks Straits, Global Food Prices Hit Three-Year High

Supply chain disruptions triggered by conflicts in Iran are rippling across the global table, with the UN Food Price Index climbing to its highest level in over three years.

The latest report released by the United Nations this Friday showed that the global food commodity price index rose by 1.6% month-on-month in April, 2.5% higher than the same period last year. This marks the third consecutive month of increases for the index, showing that the pressure of food inflation is reemerging after a period of stability.

The Iran war has now entered its third month, with the key strait of Hormuz effectively closed. This has not only severed important trade routes but also led to a severe disruption in the supply of core agricultural inputs such as diesel and fertilizers.

Vegetable oil prices have led the way in this round of increases, with the index soaring by 5.9% month-on-month in April, reaching a new high since July 2022. According to an analysis by FAO Chief Economist Máximo Torero, cited by Bloomberg, the rise in oil prices has driven increased demand for biofuels, thereby putting additional pressure on the vegetable oil market.

The meat market is also performing strongly, with the price index setting a new historical record in April. At the same time, the grain price index increased by 0.8%, mainly due to market concerns about severe weather and expectations of a decrease in wheat sowing area for 2026. Affected by the conflict, global farmers have begun to switch to crops with lower dependence on fertilizers. Core European producing areas such as France and Romania have already issued warnings that, due to the surge in input costs, local farmers are significantly reducing the sowing area of corn.

However, the FAO adjusted its expectation for global cereal production in 2025 to 3.04 billion tons in a separate report. Although this record production expectation is 6% higher than last year, whether the supply-side benefits can offset inflation in the face of the current logistics and cost crisis remains uncertain.

For investors, the index tracks the cost of raw materials rather than retail prices, which means there is a lag in the price transmission from the field to the shelf. Nevertheless, the increase in April still sends a clear signal, indicating that although consumers may not yet feel the full impact, a second acceleration of food inflation is already a foregone conclusion.