World food prices continued to rise in July for the second month in a row, particularly for vegetable oils and dairy products, according to the United Nations benchmark report.
The Food and Agriculture Organization of the United Nations (FAO) food price index registered an average of 94.2 points in July, that is, a 1.2% increase from June and about 1.0% more than in July 2019.
The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food products. It consists of the average of the price indices of five commodity groups weighted according to the average export shares of each of the groups during the period 2014-16.
Thus, the FAO Food Price Index tracks the international prices of the most traded food products.
In particular, the FAO vegetable oil price index increased by 7.6% since June and reached the highest level in five months, due to the increase in international prices of the main oils in a context, in the case of olive oil. palm, with a probable slowdown in production, a reactivation of world import demand and a prolonged shortage of migrant labor.
At the same time, the FAO Dairy Price Index rose 3.5% for the month, with increases in all products from butter and cheese to powdered milk.
The FAO Cereal Price Index remained virtually unchanged since June, although maize and sorghum prices increased sharply – influenced by significant purchases by China from the United States of America – while those for rice fell due to prospects for bumper crops in 2020.
Wheat prices showed little variation due to low commercial activity.
The FAO Sugar Price Index rose 1.4%, as the high figures for sugar milling in Brazil only partially mitigated the effects of higher energy prices and the prospects for reduced sugar production in Thailand due to a severe drought.
By contrast, the FAO Meat Price Index fell 1.8% in July and averaged lower (9.2% less) than the level reached in July 2019.
The prices of pork and beef decreased during the month due to the fact that the volume of world import demand remained below exportable availabilities, despite the disruptions caused in the sector by the coronavirus in the main exporting regions .
Poultry meat prices increased, influenced by reduced production in Brazil caused by high feed costs and concerns about future demand.
In July 2020, the price coverage of the FAO Food Price Index was expanded and its reference period revised.