Global food prices edge up in July amid heat waves, regional conflicts: FAO

Global food commodity prices rose slightly in July, driven by higher prices for cereals, sugar and vegetable oils, while lower meat and dairy prices partly offset the increase, according to a report released Friday by the Food and Agriculture Organization (FAO) of the United Nations.

The FAO Food Price Index averaged 131.1 points in July, up 0.6% from June and 1% higher than a year earlier. However, it remained 18.2% below its record high reached in March 2022.

The FAO said the cereal price index rose 3.4% month on month. Wheat prices climbed 5.8% amid concerns over disruptions to Black Sea exports and heat waves affecting major producing regions, while maize prices increased 3.6% due to hot and dry weather in parts of the US Corn Belt and stronger energy markets. Rice prices remained broadly stable.

The vegetable oil price index gained 2% to its highest level since June 2022, supported by stronger palm oil prices on robust biodiesel demand in Indonesia and higher crude oil prices, as well as firmer soybean oil prices, the report said.

Sugar prices rose 5.6% from June, reflecting concerns over hot and dry weather in Europe, adverse weather risks in major Asian producing countries and expectations that Brazil's higher ethanol blending requirement would divert more sugarcane to ethanol production, according to the report.

Meanwhile, the meat and dairy price indices fell 2.8% and 0.7%, respectively, said the report.

The FAO said global food prices remain well below the peak recorded in 2022, but geopolitical tensions and extreme weather continue to put upward pressure on prices of some agricultural commodities.