The monthly index for world food prices declined dramatically in July, down 8.6% compared with June, its largest single-month fall since 2008, according to a report released by the United Nations Food and Agriculture Organization (FAO) on Friday.
The decline in food prices came after a deal was reached in July to allow grain shipments from Ukraine and after adjustments were made to the global supply chain, which has helped relieve some price pressure, said the FAO.
As a key index measuring monthly changes in the international prices of a basket of food commodities, the FAO Food Price Index averaged 140.9 points in July, representing the fourth consecutive monthly decline. Despite the trend from July, the index is still 13.1% above levels from a year ago.
Five major components within the index retreated in July, led by a 19.2% fall in prices for vegetable oil and an 11.5% fall for grains and cereals. FAO said that development was partially related to the key deal to unblock the main Black Sea ports in Ukraine to allow grain exports from that country, one of the world’s top grain producers.
“Market responds to the expectations, market responds very quickly. So, the day they announced the agreement was arrived, future prices are subjected to decline,” said Maximo Torero Cullen, chief economist with FAO.
He then said uncertainties still exist, including pricey fertilizer and gloomy global economic outlook, which may place extreme pressure on global food security in spite of a quite inspiring trend in the global food market.
FAO’s Food Price Index is based on worldwide prices for 23 food commodity categories covering prices for 73 different products compared to a baseline year.
Russia, Ukraine agree to reopen Ukraine black sea ports for grain exports