After two consecutive months of decline, global food prices rebounded rapidly in August on smaller crop prospects, the United Nations food agency said last Thursday.
The FAO Food Price Index, which tracks monthly changes in the international prices of commonly-traded food commodities, averaged 127.4 points in August, up 3.1% from July and 32.9% higher than its level in the same month last year.
The rise was driven by reduced grain production expectations, frosts that hurt sugar-cane crops in top producer Brazil and tightening oilseed supplies.
The FAO’s index of grains costs jumped 3.4% last month, while a measure of vegetable oils climbed 6.7% and sugar prices spiked almost 10%, the most in more than a year.
The FAO cut its estimate for world grain production, partly because of a worsening wheat-crop outlook amid prolonged drought in North America and adverse weather in Russia and Kazakhstan. In Canada, wheat inventories will be the smallest in more than four decades.
FAO and the Organization for Economic Co-operation and Development in a joint report released in July said the prices of major food commodities are expected to ease in the coming decade as demand growth slows and output rises.