Global food prices rose for the third consecutive month in July, driven mainly by higher cereal, sugar and dairy quotations, according to the U.N. Food & Agriculture Organization (FAO).
The FAO Food Price Index -- a monthly trade-weighted index tracking international market prices of five major food commodity groups -- averaged 179.1 points in July, its highest value since January 2015, marking a 2.3% increase from June 2017 and a 10.2% rise from its level a year earlier.
The FAO Meat Price Index averaged 175.1 points in July, virtually unchanged from June but 8.2% above July 2016.
“An increase in international prices for ovine meat in July was offset by downward price movements in bovine, pig and poultry sectors,” the FAO report noted.
In the case of bovine meat, FAO said prices fell due to weaker import demand in the U.S. because of increased domestic supplies. Also, while global markets for pig and poultry meat have remained well supplied, FAO said international prices could have declined further if not for strong consumer demand.
The FAO Cereal Price Index, up 5.1% in July, has been rising consistently over the past three months, supported by firmer wheat and rice quotations.
“Wheat values rose the most in July as continued hot and dry weather conditions hampered spring wheat crops in North America, while seasonal tightness pushed up rice prices,” the report said, adding that maize prices, on the other hand, remained largely steady.
The FAO Dairy Price Index gained 3.6% in July, underpinned by stronger prices of butter, cheese and whole milk powder (WMP). Despite this latest increase, FAO said the index is still 21% below its peak reached in February 2014.
“Tighter export availabilities pushed butter prices to a new high in July, widening further the spread between butter quotations and other dairy products,” the report explained.
FAO said while strong buying activity from Asian importers also underpinned cheese and WMP quotations, skim milk powder (SMP) prices were weighed down by slack demand and prospects of larger releases from the intervention stocks in the European Union.
The FAO Sugar Price Index rose 5.2% in July, marking the first monthly increase since the beginning of the year. The strong appreciation of the Brazilian real was the main driver behind this rebound in sugar values, FAO noted. Despite the latest increase, sugar prices remain well below (down 26%) the same period last year.
The FAO Vegetable Oil Price Index fell 1.1% from June to its lowest level since August 2016. The July slide primarily reflected good production prospects for palm oil in Southeast Asia and weak global import demand.