News about commodities

Global food inflation is expected to accelerate in the coming months and persist into 2027, as war-related shipping disruptions and El Nino-driven drought squeeze cereal supplies. The FAO Food Price Index averaged 136 points in September, its highest since November 2022, and the World Bank found food prices rose faster than headline inflation in 22% of 150 countries in the September quarter, up from 14% previously. Wheat prices are up more than 30% in 2026, rice prices in key Asian exporters have risen 10% to 13%, and Indonesia's rice prices have hit record highs. The poorest consumers in low- and middle-income countries are hit hardest, raising the risk of social unrest and export bans, and freight rates on some key routes have risen about 50%.

FMCG companies face sustained margin pressure in the second half of the fiscal year as input costs rise, and firms are weighing post-Diwali price hikes against the risk of hurting demand in mass-market and rural categories. Grant Thornton Bharat's Naveen Malpani said palm oil prices in rupee terms were about 21% higher year over year in September, and sugar about 18% higher despite an 8% monthly correction. Pre-results analyst estimates projected operating-margin compression of about 45 basis points across major consumer staples companies, with some estimates up to 150 basis points. Parle Products' Mayank Shah said companies were absorbing costs through efficiencies, fewer discounts and lower advertising, with price increases possibly coming after the festive season. Nestle India expects sugar and edible oils to stay elevated in the December quarter, while El Niño and an uneven monsoon add uncertainty for food prices and rural demand.

FMCG companies may continue facing margin pressure in the second half of FY27 as input costs rose sharply in the September quarter. Palm oil prices were about 21% higher year-on-year in September and sugar about 18% higher, in rupee terms, while crude-linked derivatives and packaging materials also emerged as pressure points. Grant Thornton Bharat's Naveen Malpani said pre-results estimates projected operating-margin compression of roughly 45 basis points for major consumer staples companies, with some estimates showing declines of up to 150 basis points. Companies are absorbing part of the costs through efficiency gains, cost cuts, and reduced discounts and advertising, and may raise prices after the festive season, though a meaningful recovery depends on commodity prices easing. The main risk is that consumers trade down to cheaper brands or smaller packs.