Plates around the world got a little pricier in July. Prices of cereals, vegetable oils and sugar rose during the month, while meat and dairy prices fell, according to the Food and Agriculture Organization (FAO) of the United Nations.The FAO Food Price Index, which tracks monthly changes in international prices of a basket of globally traded food commodities, averaged 131.1 points in July. That was 0.6 per cent higher than in June and 1.0 per cent above its level a year earlier.The rise was largely driven by cereals, vegetable oils and sugar, with weather conditions, energy markets and geopolitical developments influencing prices during the month.
Wheat and maize lead cereal price rise
Cereal prices had a particularly strong month. The FAO Cereal Price Index rose 3.4 per cent from June, reversing its decline in May and reaching a level 6.9 per cent higher than a year earlier.Wheat prices jumped 5.8 per cent. Concerns over possible disruptions to Black Sea export flows, along with the impact of recent heatwaves on crop yields in key producing countries, pushed prices higher.Maize prices also rose 3.6 per cent. Hot and dry weather in parts of the United States and stronger energy markets amid heightened geopolitical tensions supported the increase.Rice, however, was largely unchanged, with international prices remaining broadly stable during July.Vegetable oils reach highest level since June 2022Vegetable oils also became more expensive. The FAO Vegetable Oil Price Index climbed 2.0 per cent from June, reaching its highest level since June 2022.Palm oil prices were supported by firm demand from Indonesia’s biodiesel sector and higher crude oil prices. Soy oil prices also strengthened on robust demand and improved price competitiveness.Not all vegetable oils moved higher, though. Prices of sunflower and rapeseed oil declined during the month.
Sugar prices bounce back
Sugar prices also made a comeback in July. The FAO Sugar Price Index rose 5.6 per cent, recovering from its decline in June.The increase was mainly linked to concerns over persistent hot and dry weather affecting crop yields in the European Union. El Nino-related risks to production prospects in key Asian producing countries also added to the concerns.Expectations of stronger ethanol demand in Brazil provided further support to sugar prices.
Meat and dairy prices fall
It was not a broad-based increase across all food commodities as meat and dairy prices actually fell in July. The FAO Meat Price Index dropped 2.8 per cent from its record level in June, marking its first monthly decline this year.The FAO Dairy Price Index also eased 0.7 per cent, as prices of milk powders and butter declined. For the months ahead, the FAO expects weather conditions, energy prices and geopolitical developments to remain key factors influencing global food commodity prices.