The latest FAO Food Price Index was released today, citing an increase of 12 points from June. While the Index averaged 213 points in July, it remains well below the peak levels reached in February 2011.
The increase was driven mainly by sharp jumps in grains and sugar prices and more modest increases in oils/fats. The Cereal Price Index averaged 260 points in July, reflecting the impact of the severe US drought on maize prices, which rose by almost 23 percent. Wheat prices also saw a sharp spike of almost 19 percent due to worsening crop expectations in Russia and predicted higher demand from the livestock sector to compensate for dwindling maize for feed. At 260 points, the Cereal Price Index is only 14 points lower than its all-time high, reached in April 2008.
The Oils/Fats Price Index increased 5 points from June, due largely to a diminished supply outlook for soybeans. Soybean prices recently reached an all-time high thanks to poor weather conditions in South America and the US. Similarly, the Sugar Price Index rose 34 points, triggered by untimely rains in Brazil which delayed harvesting.
The Meat Price Index fell 3 points from June. This is third monthly fall in a row for meat prices.