The latest report from the Food and Agriculture Organization (FAO), a United Nations food agency, highlights a notable rebound in the world price index for food commodities in July.
This increase was particularly evident in the vegetable oil markets, driven by renewed tensions over grain exports from Ukraine and global production concerns.
According to the FAO, the price index, which monitors the prices of the most widely traded food commodities globally, averaged 123.9 points in July.
This marks a recovery from the revised index of 122.4 in the previous month. The index’s previous reading for June, initially recorded as 122.3, had reached its lowest point since April 2021.
Despite the rebound, the July score remains nearly 12% lower than the same period the previous year and 22% below the peak witnessed in March 2022, shortly after the initiation of Russia’s invasion of Ukraine.
A significant contributor to the index’s rise was the vegetable oil price index, which surged by 12% compared to June.
This shift breaks a sequence of seven consecutive monthly declines. Sunflower oil, in particular, experienced a resurgence of over 15% month-on-month.
This increase can be attributed to the uncertainty stemming from Russia’s decision to exit the Black Sea Grain Initiative, which consequently affected shipments from Ukraine.
Additional factors contributing to the rise in vegetable oil prices include production concerns and the escalating prices of crude oil. On the other hand, the FAO’s cereal price index experienced a slight decline of 0.5% in July.
This decrease was primarily due to a dip in coarse grain markets, despite elevated levels for wheat and rice. Maize prices dropped due to expectations of forthcoming harvesting in South America and US production efforts to replenish stocks.
In contrast, wheat prices increased due to uncertainties surrounding Ukrainian exports and dry weather conditions in North America.
Meanwhile, the rice index achieved its highest point in nearly 12 years following an export ban from India.
The FAO emphasized the significance of the escalating cost of rice, highlighting ‘substantial food security concerns for a large swathe of the world population, especially those that are most poor.’
The sugar price index declined nearly 4% in July, marking a second consecutive monthly decrease.
This was attributed to favourable supply prospects in Brazil and India. However, prices remain nearly 30% higher than the levels observed a year ago.
The FAO’s dairy and meat price references observed slight declines in July, wrapping up a month of mixed shifts in global food prices.