The UN food agency’s world price index rose in July from a two-year low in May, led by an increase in the price of vegetable oils.
This was partially offset by a significant decline in sugar prices and small decreases in the price of cereals, dairy and meat.
The Food and Agriculture Organisation’s food price index, which tracks the monthly change in the international prices of a basket of food commodities, averaged 123.9 points in July against a revised 122.4 for the previous month.
The June reading was initially given as 122.3. The May score had marked the lowest since April 2021.
The July score was almost 12 per cent lower than a year ago and 22 per cent below a record peak reached in March 2022 following the start of Russia’s invasion of Ukraine, according to the FAO.
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 and 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.
More than 141 million people in the Arab world are exposed to food insecurity as the Ukraine conflict chokes crop supplies, the International Monetary Fund said last year.
Average year-on-year food inflation in the Mena region between March 2022 and December 2022 stood at 29 per cent, above headline inflation of 19.4 per cent, and these sharp increases in food prices can have long-lasting effects on future generations, the Washington-based lender said.
The FAO’s cereal price index dropped by about 0.5 per cent in July from the previous month and was 14.5 per cent below its value a year ago. The decline was caused by a fall in international coarse grain prices.
International prices of maize and sorghum declined in July due to increased seasonal supplies.
Barley prices were nearly stable, while wheat prices rose by 1.6 per cent, marking their first month-on-month increase in nine months, mainly driven by the uncertainty over Ukraine’s exports.
Continued dry conditions in Canada and the US also added pressure on prices.
Rice prices increased by 2.8 per cent in July to reach their highest level since September 2011, driven mostly by price rises in India, the FAO said.
The agency’s vegetable oil price index increased by about 12 per cent month on month, marking the first increase after seven months of consecutive declines.
This increase in July was driven by higher world prices across sunflower, palm, soy and rapeseed oils.
Global dairy prices eased 0.4 per cent from June and were 20.6 per cent below their value in the same month last year, the agency said.
Global meat prices decreased 0.3 per cent from June.
Sugar prices recorded a 3.9 per cent decrease from June, marking the second consecutive monthly decline, the FAO said.
The good progress of the sugarcane harvest in Brazil and improved rains benefiting soil moisture conditions across growing areas in India weighed on world sugar prices in July, the agency added.
Additional downward pressure on prices was exerted by sluggish import demand from Indonesia and China, the world’s largest sugar importers.
However, persistent concerns over the potential impact of the El Niño phenomenon on the 2023/24 sugarcane crops, particularly in Thailand, along with higher international crude oil prices, reined in the declines in world sugar prices, the agency said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The biog
Hometown: Birchgrove, Sydney Australia
Age: 59
Favourite TV series: Outlander Netflix series
Favourite place in the UAE: Sheikh Zayed Grand Mosque / desert / Louvre Abu Dhabi
Favourite book: Father of our Nation: Collected Quotes of Sheikh Zayed bin Sultan Al Nahyan
Thing you will miss most about the UAE: My friends and family, Formula 1, having Friday's off, desert adventures, and Arabic culture and people
Dhadak
Director: Shashank Khaitan
Starring: Janhvi Kapoor, Ishaan Khattar, Ashutosh Rana
Stars: 3
