Global food prices bounce following collapse of Black Sea grain deal
By Anna Cooban, CNN
London (CNN) — Global food prices ticked up last month after Russia pulled out of a deal to allow the safe passage of ships carrying grain from Ukrainian ports.
The United Nations’ Food and Agricultural Organization (FAO) said Friday that its global Food Price Index rose 1.3% in July compared with the month before — notching only the second increase in a year of steady declines since the grain deal was struck.
The monthly index, which tracks a range of food commodities, is still down almost 12% from July 2022, but Russia’s decision to withdraw from the UN-backed deal pushed up the prices of grains and sunflower oil.
The deal had been renewed three times, but Russia had repeatedly threatened to pull out, arguing that it has been hampered in exporting its own products. Last month, Russian President Vladimir Putin made good on those threats, and said the main purpose of the pact — to supply grain to countries in need — had “not been realized.”
Putin said last week that Russia could replace Ukrainian grain exports to “the most needy African countries,” adding that shipments of free grain to six nations, including Somalia and Eritrea, would happen in the next four months.
Vegetable oils in focus
The rebound in the Food Price Index was driven by a 12% month-on-month rise in the price of vegetable oils, the agency said, boosted, in part, by increases in global crude oil prices. The price of vegetable oil can be influenced by crude oil because it is used in the production of biofuels.
“International sunflower oil prices rebounded by more than 15% month-on-month, primarily underpinned by renewed uncertainties surrounding the exportable supplies out of the Black Sea region,” the FAO said in a statement.
Ukraine is by far the biggest exporter of sunflower oil, accounting for 46% of the world’s exports, according to the United Nations.
Concerns over flagging production of palm oil in south east Asia, and of soybean and rapeseed oil in North America, have also buoyed prices, the agency said.
The FAO’s global wheat price index — which feeds into its broader Food Price Index — jumped 1.6% in July from the month before, its first monthly increase in nine months.
Russian attacks on Ukrainian port infrastructure since the grain deal’s collapse have also bumped up prices in recent weeks. Both countries make significant contributions to global supplies.
But wheat prices are still down 46% since hitting an all-time high in February 2022, in the days following Russia’s full-scale invasion of Ukraine.
Risk of hunger
The Black Sea initiative has been significant in stabilizing global food markets since the war started in February last year, particularly for poorer countries relying more heavily on grain supplies from the region.
Before the war, Ukraine was the fifth-largest wheat exporter globally, accounting for 10% of exports, according to the Organisation for Economic Co-operation and Development.
Ukraine is also among the world’s top three exporters of barley, maize and rapeseed oil, says Gro Intelligence, an agricultural data firm.
The deal had allowed for the export of almost 33 million metric tons of food through Ukrainian ports, according to UN data.
“With approximately 80% of East Africa’s grain being exported from Russia and Ukraine, over 50 million people across East Africa are facing hunger,” Shashwat Saraf, regional emergency director for East Africa at the International Rescue Committee, said in a statement in early July.
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