GLOBAL- In an unexpected turn of events, the prices of rice and sugar have bucked the trend of declining food commodity costs in August, driven by India’s export ban on basmati rice and concerns surrounding the El Niño weather phenomenon.
While the FAO Food Price Index, compiled by the Food and Agriculture Organization of the United Nations, saw a decrease last month, rice prices reached a 15-year high.
Similarly, sugar prices saw an upward trajectory, with a 1.3% month-on-month increase and a substantial 34% rise compared to August of the previous year.
India’s decision to ban exports of non-basmati white rice in July, aimed at curbing domestic price hikes and ensuring adequate availability before the potential onset of El Niño, had a significant impact on rice prices.
India, being the world’s largest rice exporter, experienced a 9.8% surge in rice prices in August compared to July, resulting from disruptions in trade following the export ban.
The FAO attributed the increase in sugar prices to mounting concerns regarding the potential impact of the El Niño phenomenon on sugarcane crops, as well as below-average rainfall in August and prolonged dry conditions in Thailand, another major rice-producing nation.
However, the notable increase in sugar production in Brazil tempered the rise in sugar prices.
Despite these anomalies, the FAO Food Price Index has largely followed a downward trend throughout the year, except for an unexpected upswing in July.
In August, the index averaged 121.4, marking a 2.1% decline from July and an 11.8% decrease compared to the same period the previous year. It has receded by 24% from its peak in March 2022.
Looking at other commodities, the FAO’s sub-index for cereals experienced a 0.7% month-on-month decline and a 14.1% drop from the previous year, with wheat prices decreasing by 3.8% since July.
Dairy products saw a 4% decline from July, led by a decrease in whole milk powder prices, which also marked a 22.3% drop compared to the previous year.
Meat prices experienced a 3% decrease and were down by 5.3% on an annualized basis. The FAO noted that ovine prices saw the most significant decline, driven by increased export supplies, primarily from Australia, and weaker demand from China. Abundant supplies also contributed to lower prices for pig, poultry, and bovine meats.
Vegetable oil prices fell by 3.1%, marking a 23% decrease compared to the previous year, with sunflower oil prices declining by nearly 8% since July.
The FAO explained that soy oil quotations dropped due to improved soybean crop conditions in the United States, while palm oil prices moderately decreased as a result of rising seasonal output in leading producing countries in Southeast Asia.
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