World food prices, which declined in May and June, rose by 1.3% in July compared to the previous month, according to the FAO (Food and Agriculture Organization of the United Nations) in its latest survey.
The food price index for July 2023 was at 123.9 points, up 1.3% from June. However, it remains 11.8% below the value for July last year. The recovery of the index in July was driven by a significant increase in vegetable oil prices, partly offset by a significant decline in sugar prices, as well as a slight decline in cereals, dairy and meat prices, FAO experts explained.
The cereal price index in July was down 0.5 percent year-on-year and 14.5 percent year-on-year. “The slight decline this month was due to a 4.8% drop in world feed grain prices compared to June. World corn prices continued to fall due to increased seasonal supplies amid ongoing harvests in Argentina and Brazil and potentially higher than initially expected U.S. production,” the survey said.
World wheat prices rose 1.6%, the first monthly increase in nine months. FAO attributes this growth mainly to Russia’s withdrawal from the grain deal. Rice prices in July rose by 2.8%, the highest since September 2011. This was a result of price growth in the indica market segment.
The price index for vegetable oil in July rose by 12.1% y-o-y, which was the first increase after seven months of consecutive decline. Such a noticeable growth in July was due to the increase in world quotations for sunflower, palm, soybean and rapeseed oils, experts explain. In particular, world prices for sunflower oil increased by more than 15% in monthly terms.
Among the reasons for the growth the experts name “renewed uncertainty related to export supplies from the Black Sea region”, as well as “restrained prospects for growth of palm oil production in major producing countries, continuing concerns about the prospects of soybean production in the U.S. and rapeseed in Canada”. A rise in global crude oil prices also supported vegetable oil prices, the survey said.
The dairy price index fell 0.4% year-on-year and 20.6% year-on-year in July. The general cheapening was caused by a decrease in quotations for skimmed milk powder and butter. At the same time, whole milk powder prices rose slightly, mainly due to currency fluctuations. Cheese prices recovered slightly after five months of sharp decline.
Last month the meat price index decreased by 0.3% compared to June and by 5.1% compared to July last year. For example, poultry prices declined due to increased supplies from leading exporters, despite the lingering effects of avian influenza outbreaks in major producing regions. At the same time, pork prices continued to rise for the sixth consecutive month amid limited supplies from Western Europe and the US combined with strong seasonal demand.
The sugar price index decreased by 3.9% in July, the second consecutive monthly decline. But on an annualized basis, prices remain 29.6% higher. The price decline was influenced by “progress in the sugarcane harvest in Brazil and soil moisture in most parts of India,” as well as “sluggish import demand from Indonesia and China, the world’s largest sugar importers.”
The FAO Food Price Index is a weighted average that tracks international price trends for five major food commodity groups.
