Global food prices hit 3-year high as weather shocks and war drives commodity markets

GLOBAL food prices rose in July to their highest level since January 2023, driven by supply concerns linked to adverse weather conditions and escalating conflicts in major agricultural regions, the United Nations’ Food and Agriculture Organization (FAO) said on Thursday.

Reuters cited on Friday that 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 points in June.

The latest increase reflected rising prices for cereals, vegetable oils and sugar, although declines in meat and dairy prices provided some relief.

FAO chief economist said the world could face another period of food inflation as conflicts in Iran and Ukraine, together with the impact of El Niño weather patterns, create a combination of higher production costs and reduced crop yields.

The cereal price index rose 3.4 per cent month-on-month in July, led by a 5.8 per cent increase in wheat prices.

The FAO said wheat markets were affected by concerns over possible disruptions to exports from the Black Sea region, as well as heat-related damage to crops in major producing countries.

The vegetable oil price index increased 2 per cent to its highest level since June 2022, supported by higher crude oil prices following the escalation of the Iran conflict and stronger demand for biodiesel.

Palm oil and soya bean oil prices gained, although rapeseed and sunflower oil prices declined.

Sugar prices also increased by 5.6 per cent due to weather-related concerns in Europe and Asia, alongside expectations of stronger ethanol demand from Brazil.

In contrast, the FAO said meat prices fell 2.8 per cent from a record high recorded in June, with poultry, pig and bovine meat prices declining.

However, sheep meat prices reached a record high due to limited export supplies from Oceania.

Dairy prices also fell 0.7 per cent during the month.

Despite reaching the highest level in more than three years, the FAO’s July food price index remained 18.2 per cent below its record peak in March 2022, which was triggered by the impact of Russia’s full-scale invasion of Ukraine on global food markets. - August 7, 2026