The United Nations’ Food and Agriculture Organization (FAO) reports a 6 percent increase in its Food Price Index for the month of July after three months of decline. The index measures the monthly change in the international prices of a basket of food commodities. The index averaged 213 points, up 12 points from June but well below the February 2011 peak of 238 points. The sharp increase was attributed primarily to a surge in grain and sugar prices. International prices of meat and dairy barely changed.
The severe deterioration of US corn prospects following extensive drought conditions pushed up corn prices by almost 23 percent in July. International wheat futures also surged 19 percent due to worsened production prospects in the Russian Federation and expectations of strong demand for wheat as feed because of tight corn supplies. International rice prices, however, remained largely unchanged in July, with the FAO overall rice price index stable at 238, barely one point above June.