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Global food prices hit 3-year high as supply fears build
U.N.'s index of food-commodity prices rose 0.6% in July
Piles of grain sit at a grain terminal at the Port of Nansha in Guangzhou, China. (Qilai Shen/Bloomberg)
Key Takeaways:
- The U.N. food price index rose 0.6% in July to its highest level in more than three years, driven by higher grain, sugar and vegetable oil prices.
- Wheat prices climbed 5.8% amid Black Sea supply concerns, while extreme heat in Europe and dryness in U.S. growing regions threatened crop production.
- The FAO said markets will keep watching weather, trade routes, energy costs and logistics as El Niño risks and post-Iran conflict disruptions cloud outlooks.
Global food prices ticked up in July to the highest in more than three years as renewed concerns over key grain export corridors compounded adverse weather across major growing regions.
The United Nations’ index of food-commodity prices rose 0.6% in July from the previous month, led by grain, sugar and vegetable oils, according to a report from the Food and Agriculture Organization on Aug. 7.
Much of the attention on global food markets has shifted beyond the initial turmoil caused by the U.S.-Iran war to weakening harvests, trade uncertainty and persistent weather concerns.
Intensifying Russian and Ukrainian attacks are fueling fears over supplies from the key Black Sea grain region, helping to push wheat prices to a two-year high in July. Europe is also headed for one of its steepest grain harvest declines on record as extreme heat scorches crops, while dryness across major U.S. growing areas is threatening corn and soybean yields.
“Markets will continue to monitor weather conditions in major producing regions, as well as developments affecting trade routes, energy markets and logistics,” Monika Tothova, a senior FAO economist, said in an email.
Global wheat prices jumped 5.8% in July, bringing their gains to almost 10% from a year ago. Corn gained 3.6% from June, while the vegetable oils index climbed to its highest since June 2022. Meat and dairy prices eased.
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The FAO index tracks internationally traded food commodities, meaning it can take time for price changes to reach supermarket shelves.
The outlook for an unusually powerful El Niño, on top of fertilizer disruptions and elevated energy costs in the wake of the Iran conflict, means global food markets are confronting a fresh wave of production and trade risks.
