Global food prices hit 3.5-year high on wheat, corn surges

Global food prices climbed again in July, hitting their highest level in three and a half years, according to a report from the UN's Food and Agriculture Organization (FAO). The FAO's benchmark food price index averaged 131.1 points in July, a 0.6% increase from June. This marks a rebound after a slight dip in June and places the index at its highest point since January 2023.

Cereal prices saw a significant jump of 3.4% in July compared to the previous month. Wheat prices alone surged by 5.8%, fueled by concerns over exports from the Black Sea region and damage to export infrastructure. Fears about the impact of recent heatwaves on crop yields in several key producing countries also contributed to the rise.

Corn prices also increased by 3.6% due to hot and dry weather in the U.S. Corn Belt and higher energy costs amid heightened geopolitical tensions. While barley prices fell slightly, vegetable oil prices rose by 2%, reaching their highest index value since June 2022, driven by strong demand for biodiesel and higher crude oil prices.

Sugar prices jumped 5.6% in July, with concerns about the impact of prolonged hot and dry weather on crops in the European Union and potential effects of El Niño on production in key Asian countries. Dairy prices decreased slightly, but cheese prices rose for the first time since July of the previous year due to seasonally lower milk supplies in the EU. Meat prices fell by 2.8%, marking the first decrease this year, as lower poultry, pork, and beef prices outweighed increases in lamb prices.