Rice bucks trend as world food prices drop in August, UN agency says

World food prices declined in August as vegetable oil rates dropped amid weakening global import demand and abundant offers from major exporters, although rice prices soared, the UN's Food and Agriculture Organisation has said.

The FAO Food Price Index, which tracks the monthly change in the international prices of a basket of food commodities, averaged 121.4 points in August, down 2.1 per cent from July and up to 24 per cent below its peak recorded in March 2022, the UN agency said on Friday.

By contrast, the FAO's rice index gained 9.8 per cent on a monthly basis to hit a 15-year nominal high. This was due to “trade disruptions in the aftermath of a ban on Indica white rice exports by India, the world’s largest rice exporter”, FAO said.

“Uncertainty about the ban’s duration and concerns over export restrictions caused supply-chain actors to hold-on to stocks, renegotiate contracts or stop making price offers, thereby limiting most trade to small volumes and previously concluded sales,” it said.

The overall index had risen to 123.9 in July, from a two-year low in May, as the price of vegetable oils increased.

“The drop [in August] reflected declines in the price indices for dairy products, vegetable oils, meat and cereals, while the sugar price index increased moderately,” the Rome-based FAO said.

The vegetable oil price index declined by 3.1 per cent, reversing a sharp 12.1 per cent gain in July, led by an 8 per cent drop in the prices of sunflower oil.

Quotations for soya oil dropped as soya bean crop conditions in the US improved, while those for palm oil fell moderately amid seasonally rising output in leading producers in South-East Asia.

Soaring food prices will weigh on the growth of Mena economies this year as double-digit food inflation hits poorer households and intensifies food insecurity in the long term, a World Bank report said in April.

About one in five people living in developing countries in the Mena region is expected to face food insecurity this year while almost eight million children under the age of five will be hungry, said the report, which examined the impact of rising food prices on the region.

Cereal prices in August dropped by 0.7 per cent from July as international wheat prices fell 3.8 per cent in August and international coarse grain prices declined 3.4 per cent.

Maize prices fell for the seventh straight month to hit their lowest value since September 2020, while sorghum prices declined as well. Barley prices firmed up slightly.

The dairy price index was down 4 per cent from July to register an eighth monthly decline in a row, and up to 22.4 per cent below levels posted in the same period in 2022.

International prices across all dairy products declined, with whole milk powder prices falling the most, while skimmed milk powder prices hit their lowest level since mid-2020. Butter and cheese prices also posted declines.

Meanwhile, the sugar price index gained 1.3 per cent month on month and by as much as 34.1 per cent from a year ago, mainly driven by growing concerns over the impact of the El Nino weather phenomenon on global production prospects.

The meat price index was down 3 per cent from July and 5.4 per cent from the same month last year, as the cost of all types of meat fell.