World food price index rebounds in July as vegetable oils rise

Combines harvest wheat in a field in the course of Russia-Ukraine conflict near the settlement of Nikolske in the Donetsk Region, Russian-controlled Ukraine, July 19, 2023. REUTERS/Alexander Ermochenko//File hpoto

PARIS – The United Nations food agency’s world price index rebounded in July from two-year lows as vegetable oil markets rose following renewed tensions over grain exports from Ukraine and concerns over global production.

The Food and Agriculture Organization’s (FAO) price index, which tracks the most globally-traded food commodities, averaged 123.9 points in July against a revised 122.4 for the previous month, the agency said on Friday.

The June reading, initially given as 122.3, was the lowest for the index since April 2021.

The July score was almost 12 percent lower than a year ago and 22 percent below an all-time peak in March 2022, just after the start of Russia’s invasion of Ukraine.

The FAO’s vegetable oil price index climbed 12 percent compared with June, breaking a run of seven straight monthly declines, the agency said.

Sunflower oil rebounded by more than 15 percent month-on-month, mainly because of uncertainty created by Russia’s decision to quit the Black Sea Grain Initiative to allow shipments from Ukraine, the FAO said.

Production concerns and rising crude oil prices, drove other vegetable oils higher.

The FAO’s cereal price index edged down 0.5 percent in July, as a drop in coarse grain markets offset higher levels for wheat and rice.

Maize prices fell on the prospect harvesting in South America and U.S. production will replenish stocks.

In contrast, doubts over Ukrainian exports and dry weather in North America boosted wheat prices, and the rice index climbed to its highest in almost 12 years following an Indian export ban, the FAO said.

It reiterated its worries over the impact of the rising cost of rice, citing “substantial food security concerns for a large swathe of the world population, especially those that are most poor”.

The sugar price index shed nearly 4 percent in July, marking a second straight monthly drop on favorable supply prospects in Brazil and India, though prices were nearly 30 percent above a year ago.

The FAO’s dairy and meat price references both fell slightly in July.