World food prices rose in July
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World food prices rose in July after declining in June and May, reported Food and Agriculture Organization of the United Nations (FAO).
The world food price index (FFPI) calculated by the organization amounted to 123.9 points in July, which is 1.3% more than in June. In annual terms, the index fell by 11.8%.
The FAO explains such dynamics by a sharp (+12.1%) increase in prices for vegetable oils, which was preceded by a seven-month decline. World prices for sunflower oil in July increased by 15% at once against the background of uncertainty regarding export supplies after Russia’s withdrawal from the grain deal. At the same time, prices for palm, soybean and rapeseed oils rose due to market concerns about the prospects for production in major exporting countries.
The withdrawal of Russia from the grain deal, as well as the drought in North America, contributed to a rise in wheat prices by 1.6%, the FAO noted, while grain prices as a whole fell by an average of 0.5% for the month. Rice prices rose 2.8% m/m and 19.7% y/y amid India’s July 20 ban on uncooked indica exports, hitting their highest levels since 2011.
The grain deal was concluded on July 22, 2022 by representatives of Turkey and the UN, on the one hand, and representatives of Russia and Ukraine, on the other. As part of the negotiations, two agreements were signed between Moscow and Kiev. The first is for the export of Ukrainian grain from three ports, including Odessa, Yuzhny and Chornomorsk, the second is for assistance in the export of Russian grain and fertilizers. On July 17, 2023, Russia withdrew from the Black Sea Initiative, as the second part of the agreement remained unfulfilled.
On August 2, a telephone conversation took place between Russian and Turkish Presidents Vladimir Putin and Recep Tayyip Erdogan, during which they discussed a grain deal. Putin announced Moscow’s readiness to return to the grain deal as soon as the West fulfills its second part. At the same time, it was noted that in the absence of progress in the implementation of the Russian part, the next extension of the deal lost its meaning.
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