The FAO index of global commodity prices rose 1.3 percent during July, its second increase since April, reflecting the termination of the Black Sea grain initiative and India’s restrictions on rice exports. The increases punctuated a longer-term decline in commodity prices in the past year.
The upturn in the Food Price Index “was led by a solid rise in the vegetable oil index” of 12 percent during July, said the UN Food and Agriculture Organization. It was the first increase in vegetable oil prices after seven months of declines. The four other components of the index — grains, dairy, meat, and sugar — were down from the previous month.
“This pronounced increase in July was driven by higher world quotations across sunflower, palm, soy, and rapeseed oils,” said the FAO. “International sunflower oil prices rebounded by more than 15 percent month-on-month, primarily underpinned by renewed uncertainties surrounding the exportable supplies out of the Black Sea region after the decision taken by the Russian Federation to terminate the implementation of the Black Sea Grain Initiative.”
Ukraine is the world’s largest exporter of sunflower oil as well as a leading supplier of wheat and corn.
Although the cereal grain index was marginally lower in July, due to lower corn and sorghum prices, “international wheat prices rose by 1.6 percent, marking their first month-on-month increase in nine months, mainly driven by the uncertainty over Ukraine’s exports,” said the FAO. The sub-index for rice “increased by 2.8 percent in July to reach its highest level since September 2011, driven mostly by price increases in the Indica market segment.”
In a companion report, the FAO forecast world cereal grain production at a record 2.819 billion tonnes in 2023. The harvest would be 1.1 percent larger than last year and “almost entirely reflects better prospects for global wheat production.” All the same, the forecast of 783.3 million tonnes of wheat in 2023/24 still would be slightly smaller than the record wheat harvest of 801.8 million tonnes in 2022/23.