GLOBAL – The FAO Food Index report, which is compiled by the Food and Agriculture Organization of the United Nations, climbed 1.3% in July compared to the previous month attributing to the end of the Black Sea grain deal and India’s ban on exports of non-basmati rice.
According to FAO, July’s food Index increase was driven by a sharp jump in the vegetable oil price index, which rose 12.1% from June after seven months of consecutive declines.
On the other hand, International sunflower oil prices rebounded by more than 15% in the month, due mostly to renewed uncertainties surrounding the exportable supplies after the end of the Black Sea Grain deal.
Meanwhile, the rice price index, part of the cereal index, from the UN organization’s report increased by 2.8% during the month and 19.7% on the year to reach its highest nominal level since September 2011.
The spike comes after India banned exports of non-basmati white rice on 20 July in an effort to control rising prices and boost availability before the upcoming El Niño weather event. Non-basmati white rice reportedly constitutes about 25% of India’s total rice exports.
The FAO said that the upward pressure on rice prices from this prohibition “raises substantial food security concerns for a large swathe of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food”.
Additionally, FAO reports that international wheat prices rose by 1.6%, their first monthly increase in nine months, due to uncertainty over exports from Ukraine as well as continued dry conditions in North America
However, the price of cereal dropped 0.5% from June due to a 4.8% decline in international coarse grain quotations due to higher seasonal supplies of maize from ongoing harvests in Argentina and Brazil.
According to FAO, the index report covers five commodity prices including cereals, vegetable oils, meat, dairy, and sugar led by a two-year low in cereal prices.
The Black Sea Grain Initiative, an agreement first struck with Russia in July last year for a 120-day term, allowed for the passage of grains out of three Ukrainian ports. However, having been extended several times, the deal was, however, terminated on July 17.
Two days later, Russia warned that it would view all ships heading across the Black Sea to Ukraine as possibly carrying military equipment, following Ukraine President Volodymyr Zelensky saying Russia’s decision to terminate the Black Sea grain deal does not mean the export operations is dead in the water.
According to Zelensky, Russia attacked Odesa’s grain terminals and destroyed 60,000 metric tons of grain.
FAO also revealed that the climate crisis is already making its impact felt on the supply of certain crops and the food industry will be watching the latest El Nino, as its impact is likely to be felt into 2024.