World food prices hit 3-year high in July as weather and war weigh: UN agency

PARIS - World food prices rose in July to their highest in more than three years as adverse weather and war escalation in the Gulf and Black Sea supported crop markets, the United Nations' Food and Agriculture Organization (FAO) said on Aug 7.

The FAO Food Price Index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 131.1 points in July, up from 130.3 in June and the highest reading since January 2023.

The FAO's chief economist told Reuters this week that the world faces another bout of food inflation as wars in Iran and Ukraine, along with El Nino, create a perfect storm of higher costs and lower crop yields.

A 3.4 per cent month-on-month rise in the FAO's cereal price index drove the July trend, fuelled in turn by a 5.8 per cent jump in wheat prices, the agency said.

Wheat markets were affected by concerns over Black Sea export disruptions and heat damage to crops in key producing regions, it said.

The FAO's vegetable oil index rose 2 per cent to its highest level since June 2022.

Higher crude oil prices amid escalation in the Iran war and strong demand for biodiesel supported palm and soya bean oil prices, though rapeseed and sunflower oil declined.

Sugar prices rose 5.6 per cent on weather concerns in Europe and Asia and expectations of stronger ethanol demand in Brazil.

In contrast, meat prices fell 2.8 per cent from a record high in June, FAO said.

Poultry, pig and bovine meat prices declined, though sheep meat prices reached a record high amid tight export supplies in Oceania. Dairy prices fell 0.7 per cent.

The FAO's overall food price index reading for July was slightly above a previous three-year high in April.

The latest reading was nonetheless 18.2 per cent below its March 2022 peak that followed Russia's full-scale invasion of Ukraine. REUTERS