Food Prices Pick Up as Trade Tensions, Extreme Weather Flare

Global food prices rose for the first time in three months, as trade disruptions from India to the Black Sea and extreme weather stoke supply concerns anew. 

The United Nations’ index of food-commodity prices gained 1.3% in July, led by vegetable oil, according to a Friday report. That marks a pickup from the two-year low reached the prior month as fresh threats emerge in the supply chain. 

Last month, Russia exited the Black Sea grain deal that helped usher millions of tons of Ukrainian crops abroad. On top of that, top rice exporter India banned some shipments of the staple, and extreme weather is curbing harvests in places like China and southern Europe. 

The rice index from the UN’s Food and Agriculture Organization reached its highest nominal level since 2011, following the curbs in India. That “raises substantial food security concerns for a large swathe of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food,” the FAO said.

While the index remains well below last year’s record, the increase poses a fresh risk for food inflation, which remains high at the global level. Prices are still soaring in Egypt, although the run-up has begun to slow or decline in nations like Kenya and Brazil.

Vegetable oil prices rose 12% during the month. The gain was driven by Black Sea trade uncertainties, coupled with North American crop concerns and subdued palm oil production prospects, FAO said.