In August, the United Nations food agency’s global price index for food commodities dropped to a new low for the past two years, reversing a rebound observed in the prior month. This decline was driven by decreases in the prices of most food items, although there were increases noted in rice and sugar.
The Food and Agriculture Organization (FAO) reported that the price index, which monitors the prices of the most widely traded food commodities globally, averaged 121.4 points in August. This was a decrease from the revised figure of 124.0 for the previous month.
Initially, the July reading had been reported as 123.9, signifying a recovery from a two-year low in June. The August figure marked the lowest point since March 2021 and was 24% lower than the all-time high reached in March 2022 following Russia’s invasion of Ukraine.
The overall decrease in the index was driven by declines in the prices of dairy products, vegetable oils, meat, and cereals, despite a significant increase in the FAO’s rice benchmark, which reached a 15-year high due to Indian export restrictions disrupting trade amid tight supplies ahead of new crop harvests.
The FAO’s cereal index experienced a 0.7% decline from July due to decreasing wheat prices during the northern hemisphere harvest season, while maize (corn) faced its seventh consecutive monthly decline, reaching a nearly three-year low. This was influenced by a record harvest in Brazil and the upcoming US harvest.
FAO’s rice index
In contrast, the FAO’s rice index surged by nearly 10% month-on-month as India’s decision in July to ban exports of Indica white rice disrupted trade at a time when supplies were already limited ahead of new crop harvests.
The FAO’s sugar index increased by 1.3% in August compared to the previous month, rising by 34% compared to the previous year, driven by concerns about the impact of the El Nino weather pattern on global sugar production.
Vegetable oil prices decreased by 3.1% in August, and dairy prices fell by 4%, marking the eighth consecutive monthly decline. This was attributed to ample supply in Oceania and reduced Chinese imports.