Food prices experienced a decline in August, providing some relief for consumers. The Food and Agriculture Organization of the United Nations (UN FAO) reported that a strong supply of wheat, corn, and other essential food items contributed to the decrease in global food commodity prices. However, there are concerns surrounding the price of rice due to Indian export restrictions.
According to the UN FAO’s food price index, which monitors the prices of staple foods worldwide, the average index reached 121.4 points in August. This figure represents a 2.1% decrease compared to July, and a significant 24% drop from the peak observed in March 2022. The main factors behind this decline were lower prices for dairy and vegetable oil, alleviating some of the inflation concerns faced by policymakers.
Nevertheless, the report highlighted an alarming increase in rice prices. The price index for rice rose by 9.8% during August, reaching a 15-year high. This surge can be attributed to trade disruptions caused by India’s ban on the export of Indica white rice.
India is the largest exporter of rice globally, and the uncertainty regarding the ban’s duration has created concerns among supply-chain actors. As a result, these actors have been holding onto stocks, renegotiating contracts, or halting price offers. Consequently, trade volumes have significantly decreased, limited to small quantities and previously agreed-upon sales.
Despite the general decline in food prices in August, the challenges surrounding rice highlight the ongoing risks faced by the global food market. The UN FAO will continue to monitor and assess these developments to provide valuable insights into the world’s food security.
Decline in Cereal Prices Continues
Rice Remains Stable, While Wheat and Corn Prices Drop
Supply from Brazil and Russia Keeps Pressure on Prices
Vegetable Oil Prices Witness Another Dip
Sunflower Oil Leads the Way as Demand Weakens
August saw a decrease of 3.1% in vegetable oil prices, reaching an index of 125.8. The significant drop came as a result of reduced demand and an ample supply of other vegetable oils. However, it is important to note that this decline follows a substantial 12% surge in July, putting prices slightly below the April level.
Sugar Prices Show an Uptick
Concerns over Poor Harvest Drive the Increase
Sugar prices witnessed a 1.3% rise in August, marking a staggering 34.1% increase compared to the previous year. The FAO attributes this surge to concerns surrounding a poor harvest caused by the El Nino weather phenomenon.
According to the FAO, “Below-average rainfall in August affected the development of the sugarcane crops in India, while ongoing dry weather conditions in Thailand are expected to impact sugar production for 2023-24.”
Continued Decline in Dairy and Meat Prices
Eighth Consecutive Month of Decline for Dairy
The declining trend in dairy prices persisted in August with a 4% decrease compared to July. This marks the eighth consecutive month of decline and leaves prices 22% lower than they were a year ago.
Meat prices also saw a decline of 3% in August, with sheep and chicken prices leading the way.
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