Global Food Prices See Biggest Decline Since 2008, But Will it Last?

August 10, 2022

Global food prices in July saw the largest decline since 2008 as concerns about the global food supply eased following a tentative agreement between Russia and Ukraine that would allow Ukraine to restart exports.

The United Nations index of world food costs plummeted nearly 9% last month. That puts the index at its lowest level since January, just before Russia’s invasion of Ukraine, a major exporter of food, caused a record-breaking surge in food costs.

July marks the fourth consecutive month of decline in the index, offering some relief to consumers throughout the world who have seen rampant inflation in everything from food to energy. Even with the recent retreat, prices remain elevated, meaning more pressure on households and the risk of hunger in some parts of the world.

While the resumption of exports from Ukraine is a promising sign, there is still expected to be a major shortfall in supplies from Ukraine due to disruptions from the war, and major producers throughout the rest of the world are seeing decreased output amid drought and soaring temperatures.

Global production of corn and soybeans during the 2021-2022 season was 45 million lower than initial forecasts, and the USDA is expected to cut its outlook for this year’s output, according to analysts polled by Bloomberg. The EU estimates that Europe’s wheat harvest will be 5% lower than last year following a record-breaking heatwave.

Australia and Canada are expected to have good harvests this year, but Bloomberg reports that Russia is set to be the biggest market winner this year following a massive harvest. However, exports from Russia are slower than usual as exporters struggle to secure vessels, crewmen, and insurance for ships as the war drags on.

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