The FAO Food Price Index, based on prices of meat, dairy, grains, sugar and vegetable oil, has been on an upward trajectory since the start of 2016. Pushed by higher wheat and dairy prices, the index now has a reading of 175.2, the second time this year that it is on par with prices in February 2015, said the UN agency.
Prices are 7 percent higher than a year ago, said the FAO in a monthly report. Wheat prices surged in June because of deteriorating conditions for the spring wheat crop in the United States, said FAO. Butter prices rose by 14 percent to an all-time high, leading an overall increase of 8.3 percent in dairy prices based on limited export supplies among the major producer nations. “Meat quotations also firmed while those of sugar and vegetable oils dropped,” said the FAO.
The current reading of 175.2 nearly matches the February mark of 175.5, highest since 175.8 in February 2015, 29 months ago. During the commodity boom, the index peaked at 240.1 in early 2011.
World grain production will be a near-record 2.593 billion tonnes, estimated FAO in its Cereal Supply and Demand Brief. Consumption has lagged grain output in recent years, so grain inventories are forecast for a record 704.2 million tonnes at the end of 2017/18, the second year in a row they have exceeded 700 million tonnes.