Prices for food commodities rebounded in July, driven in part by a sharp rise in the cost of sunflower oil as Russia terminated the Black Sea Grain Initiative, creating new uncertainty about Ukraine’s ag exports, the UN Food and Agriculture Organization reported Friday.
The FAO Food Price Index increased1.3% last month to 123.9 points, despite declines in prices for cereal grains other than wheat, as well as dairy products, meat and sugar.
International wheat prices rose 1.6% in July, “marking their first month-on-month increase in nine months, mainly driven by the uncertainty over Ukraine’s exports,” FAO said. The organization added that “continued dry conditions” in the U.S. and Canada also have pressured wheat prices.
The Food Price Index is still 11.8% below its July 2022 level. Since then, the index had fallen every month except for April.
FAO’s vegetable oil index jumped 12.1% in July after seven consecutive months of decline, led by the more than 15% increase in the price of sunflower oil, a major export commodity for Ukraine. The price increase was “primarily underpinned by renewed uncertainties surrounding the exportable supplies out of the Black Sea region,” FAO said.
Prices for palm, soybean and canola, or rapeseed, oils also rose in July. The increases for soybean and canola oil were driven by uncertainty about soybean production in the United States and Canada’s canola harvest, FAO said.
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Despite the rise in wheat prices, FAO’s index for cereal grains slipped 0.5% in June, led by a decline in corn prices that was driven by strong production in Argentina and Brazil and “potentially higher-than-initially-anticipated production” in the United States, FAO said. The cereal index is down 14.5% year over year.
The meat index declined 0.3% in July on lower prices for beef and poultry that offset an increase in the cost of pork, which rose for the sixth consecutive month, FAO said.
The dairy price index eased down 0.4% last month, led by lower prices for skim milk powder and butter. The dairy index is now 20.6% below its level a year ago.
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