The August FAO Food Price Index increased by 3 points (1.9 percent) from July to 165.6 points reaching a 15 month high. This increase was predominantly driven by price increases in dairy, oils and sugar, though all commodities covered except for cereals experienced an increase.
The August Cereal Price index fell by 4.5 points and is currently 7.4 percent below its year earlier level. The completion of wheat harvests in the northern hemisphere placed downward pressure on wheat prices. Similarly, maize prices decreased due to excellent crop prospects in the United States.
The Vegetable Oil Price Index averaged 169.1 points in August, up 11.7 points (7.4 percent) over July. These increases were mainly driven by lower output in Malaysia and increased demand from a number of countries, mainly China, India and the EU. Similarly, rapeseed oil prices declined due to diminished crop prospects in the EU.
The Dairy Price Index experienced the largest monthly increases, up 8.6 percent over July. These price decreases were mainly driven by falling milk production in the EU. By contrast, the Meat Price Index remained relatively stable, up 0.3 percent from July and down 5 percent from 1 year ago.
The Sugar Price Index was up 2.5 percent over July, reaching its highest level since October 2012. This latest surge in the price of sugar can largely be attributed to a continued appreciation of the Brazilian currency. Expectations of a significant deficit in 2016/2017 further increased prices.
The FAO Food Price Index is a measure of the monthly change in international prices of a basket of 5 food commodity groups. The next update to the FAO Food Price Index will be released on October 6th.