Global food prices tick up in July on costlier cereals, oils, sugar

Global food commodity prices moved higher in July, snapping a recent easing trend, as gains in cereals, vegetable oils, and sugar outweighed declines in meat and dairy, the UN's Food and Agriculture Organization (FAO) said.

The FAO Food Price Index, a monthly gauge of international prices for a basket of traded food items, averaged 131.1 points last month. That was up 0.6% from June and 1.0% above its level a year earlier.

Leading the advance was the Cereal Price Index, which climbed 3.4% from June and stood 6.9% higher than a year ago. Wheat prices jumped 5.8% on concerns over disruptions to Black Sea export flows and heatwave damage to crops in major producing regions. Maize prices rose 3.6%, supported by hot, dry weather in parts of the United States and firmer energy markets amid heightened geopolitical tensions. Rice prices, however, remained broadly stable.

The Vegetable Oil Price Index increased 2.0% month-on-month, reaching its highest level since June 2022. Palm oil prices were underpinned by solid demand from Indonesia's biodiesel sector and higher crude oil prices, while soy oil strengthened on robust demand and improved price competitiveness. Sunflower and rapeseed oil prices, by contrast, declined.

Sugar prices also rose sharply, with the Sugar Price Index up 5.6% from June. The FAO attributed the rebound to persistent hot and dry weather threatening EU crop yields, El Nino-related risks to production in key Asian countries, and expectations of stronger ethanol demand in Brazil.

Offsetting some of these gains, the Meat Price Index fell 2.8% from its record June level, marking its first monthly decline this year. The Dairy Price Index eased 0.7% as milk powder and butter prices softened.

The FAO noted that weather conditions, energy prices, and geopolitical developments are likely to remain the key drivers of global food commodity prices in the months ahead.