Global Food Price Index Rises Due to Concerns Over Disrupted Supplies

Global food prices witnessed an increase in July, with the FAO index of global commodity prices seeing a 1.3% rise. This marks its second ascent since April, primarily influenced by the termination of the Black Sea grain initiative and India’s restrictions on rice exports. Despite this recent surge, commodity prices have largely seen a decline over the past year.

The significant contributor to this upward trajectory was the vegetable oil index, which surged by 12% in July, as reported by the UN Food and Agriculture Organization. This surge breaks a seven-month decline in vegetable oil prices. Major global oils, including sunflower, palm, soy, and rapeseed oils, witnessed a rise in their quotations. Particularly, international sunflower oil prices experienced a notable 15% hike, influenced by the unpredictability surrounding the Black Sea region’s supplies. This was largely due to Russia’s decision to terminate the Black Sea Grain Initiative.

Ukraine, a major player in the global market as the leading exporter of sunflower oil and a significant supplier of wheat and corn, played a pivotal role in these shifts. Although a slight dip was observed in the cereal grain index for July, international wheat prices saw a 1.6% increment. This is mainly attributed to uncertainties revolving around Ukraine’s exports. Additionally, the rice sub-index soared by 2.8%, reaching its peak since September 2011, primarily driven by the Indica market segment.

In a related forecast, the FAO predicts a record global cereal grain production of 2.819 billion tonnes in 2023, marking a 1.1% growth from the previous year. This optimistic projection primarily stems from promising global wheat production prospects. However, the estimated wheat output of 783.3 million tonnes for 2023/24 is expected to fall short of the record 801.8 million tonnes achieved in 2022/23.