According to the Food and Agriculture Organization of the United Nations (FAO), the termination of the grain transport treaty across the Black Sea has led to a rise in world food prices. The agreement ended on July 17 because Russia no longer abided by it.
World agricultural prices rose slightly in July for the first time in seven months (+1.3%). This increased the FAO food index to 123.9 points. That is still 11.8 percent lower than a year ago.
A decisive factor, according to the FAO, was a sudden increase in the vegetable oil price index, which rose sharply by 12.1 percent after a seven-month decline. This mainly reflected the increase in the price increase of (Ukrainian) sunflower oil by more than 15 percent.
The market experts attribute the rise in food prices not only to the end of the grain agreement, but mainly to new trade restrictions in India on rice exports. The Indian export ban applies to all types of rice except basmati rice, broken rice and some types of parboiled rice. The measure affects about half of all exports from the Asian country, which accounts for more than 40 percent of global rice exports.
The FAO index for all rice rose in July by 'only' 2.8% compared to June, but by no less than 19.7% compared to last year, reaching the highest level since September 2011 (= terrorist attacks on the Twin Towers in New York City). This upward pressure on rice prices “is leading to significant food security concerns for a large part of the world's population, especially the poorest,” the FAO warned.
The FAO Monthly Review also shows that international wheat prices increased by 1.6%, their first increase in nine months, due to uncertainty over exports from Ukraine and continued dry conditions in North America. A drop of 4.8% in the international price of coarse grain due to higher seasonal supplies of maize from current harvests in Argentina and Brazil caused a drop of 0.5% in the grain price index.
The dairy price index fell by 0.4% and is now 20.6% lower than in 2022. World cheese prices recovered slightly after warm weather impacted the seasonally declining milk supply in Europe.
Quotations for beef, sheep and poultry fell in July on solid supply and, in some cases, lower demand from leading importers. This led to a fall in July's meat price index of 0.3%. Pork prices, on the other hand, rose, reflecting high seasonal demand coupled with continued tight stocks from Western Europe and the US, the FAO said.