Global Food Prices Remain High
The United Nations Food and Agriculture Organization (FAO) announced on Friday that global food prices remained at their highest level in nearly two years in August. Increases in the prices of meat, sugar, and vegetable oils offset the decline in the cost of cereals and dairy products.
FAO Food Price Index
The FAO Food Price Index, which tracks monthly changes in the prices of a basket of internationally traded food commodities, reached 130.1 points in August, compared to 130.0 points in July (revised figure). It also increased by 6.9% on an annual basis. This is the highest level since February 2023, but still 18.8% below the peak reached in March 2022, after the start of the Russian-Ukrainian crisis.
Price Changes by Commodity
- Vegetable Oils: Prices increased by 1.4% in August, reaching their highest level in over three years. Palm, sunflower, and rapeseed oils were supported by Indonesia's plans to increase its biofuel mandates, while soybean oil prices fell due to forecasts of abundant supply. Indonesia is trying to increase the mandatory proportion of palm oil in biodiesel to reduce its dependence on imported fossil fuels.
- Cereals: Prices fell for the fifth consecutive month, recording a 0.8% decrease in August compared to July. Wheat prices declined due to abundant harvests in the European Union and Russia. Corn prices rose due to increased demand for feed and ethanol in the United States. Rice prices also fell, mainly due to the weakness of the Indian rupee and strong competition among exporters, which pushed Indian rice prices to their lowest level in three years.
- Meat: The meat price index rose by 0.6%, reaching a historic high due to strong demand for beef in the United States and China. Lamb prices increased, pork prices remained stable, and poultry prices fell due to abundant supply from Brazil.
- Dairy Products: Prices fell by 1.3%, due to a decline in the prices of butter, cheese, and whole milk powder, caused by weak demand from Asian markets.
Overall, global food prices remain high, driven by increases in the prices of meat, sugar, and vegetable oils, while cereal and dairy prices have declined.
