Global food prices rose in July to their highest level in more than three years, as extreme weather and conflicts affecting major agricultural regions pushed up the cost of cereals, sugar and vegetable oils. The United Nations’ Food and Agriculture Organization said its Food Price Index averaged 131.1 points during the month, compared with 130.3 in June.
The increase puts renewed attention on the pressures affecting internationally traded food commodities. War-related disruption around the Black Sea, higher energy costs linked to conflict in the Gulf and damaging weather in several crop-producing regions have all influenced markets. At the same time, the latest index remains 18.2 per cent below the peak recorded in March 2022 after Russia’s full-scale invasion of Ukraine.
Wheat and Other Cereals Lead the July Increase
Cereals were the main driver of the monthly rise. According to Reuters, the FAO’s cereal price index increased by 3.4 per cent from June, while international wheat prices climbed by 5.8 per cent during July.
The FAO linked the rise in wheat prices to continued disruption affecting Black Sea exports, damage to export infrastructure and the impact of recent heatwaves on crop yields in several major producing countries. Russian and Ukrainian attacks in the region have intensified concerns about supplies moving through an area that remains important to international grain trade.
Maize prices also moved higher, rising by 3.6 per cent. The FAO said the increase reflected worries about hot and dry conditions in parts of the United States Corn Belt, together with the effect of firmer energy markets during heightened geopolitical tensions.
Other cereals followed different paths. International sorghum prices increased alongside maize prices in the United States, while barley prices fell by 1.9 per cent. The FAO attributed the barley decline to favourable crop prospects in Australia and the Black Sea region, which outweighed heat-related yield losses in the European Union.
Rice prices were comparatively stable. The FAO All Rice Price Index remained broadly unchanged in July, with a modest increase in Indica prices offset by weaker demand for other major traded varieties.
Sugar and Vegetable Oils Rise While Meat and Dairy Fall
The increase was not limited to grains. According to Bloomberg, the FAO’s broader food commodity index was led higher by grain, sugar and vegetable oils as markets responded to weather concerns, trade uncertainty and supply risks.
The vegetable oil index increased by 2 per cent, reaching its highest level since June 2022. Reuters reported that higher crude oil prices during the escalation of the Iran conflict, alongside strong demand for biodiesel, supported palm and soy oil prices. Rapeseed and sunflower oil prices declined. Sugar prices rose by 5.6 per cent. The increase was associated with weather concerns in Europe and Asia, as well as expectations of stronger demand for ethanol production in Brazil.
Some major food categories moved in the opposite direction. Meat prices fell by 2.8 per cent after reaching a record high in June. Poultry, pig and bovine meat prices all declined, although sheep meat reached a record level because of tight export supplies from Oceania. Dairy prices also slipped by 0.7 per cent. Taken together, the July figures show that the rise in the overall index was concentrated mainly in crop-related commodities, while several animal-product categories became cheaper during the month.
