Food Prices Soar on Heat Waves and Drought

Global food prices have rebounded after a month of decline, driven by heat waves and drought in major producing regions. According to the Ministry of Agriculture, Food and Rural Affairs, the UN Food and Agriculture Organization's (FAO) world food price index rose 0.6% from the previous month to 131.1 points.

The FAO reported that sugar prices led the increase, climbing 5.6% due to concerns over hot and dry weather in the European Union and El Niño-related conditions affecting production prospects in Asia. A stronger outlook for ethanol demand also supported the price rise, as a temporary increase in Brazil's mandatory ethanol blending ratio in gasoline reduced sugar supply.

Grain prices rose 3.4% to 113.8 points, with wheat and corn leading the increase. Wheat prices surged 5.8% amid disruptions to export flows in the Black Sea region and heat waves. Global corn prices also rose 3.6%, while the rice price index remained stable.

The meat price index fell 2.8% from the previous month, its first decline this year, due to international poultry prices dropping as Brazil's export supply became sufficient. Pork prices also fell on ample EU supply and slowing global demand.