FAO's Food Price Index Sees Year-End Decline, Sugar Plummets, Meat Dips; Dairy Bucks the Trend

The FAO Food Price Index, monitoring monthly fluctuations in internationally traded food commodities, averaged 118.5 points in December, marking a 1.5 percent decrease from November and a notable 10.1 percent drop from December 2022.

Throughout 2023, the index remained 13.7 percent below the preceding year's average, with only the international sugar price index displaying an upward trend.

The FAO Cereal Price Index witnessed a 1.5 percent increase from November, attributed to rises in wheat, maize, rice, and barley prices. This uptick reflected logistical challenges hindering shipments from major exporting nations. Despite this, the index closed the year 15.4 percent below the 2022 average, indicating well-supplied global markets. However, the FAO's All Rice Price Index within this category soared by 21 percent due to concerns related to El Niño's impact on rice production and India's imposed export restrictions.

Conversely, the FAO Vegetable Oil Price Index dropped by 1.4 percent from November, attributed to subdued purchases of palm, soy, rapeseed, and sunflower seed oil. Factors contributing to this decline included reduced demand from the biodiesel sector, particularly impacting soy oil, and improved weather conditions in major Brazilian growing areas. The year as a whole saw this index plummet by 32.7 percent compared to the previous year.

The FAO Sugar Price Index recorded a staggering 16.6 percent decrease from November, hitting a nine-month low while remaining 14.9 percent higher than December 2022. This sharp decline was primarily due to Brazil's accelerated production pace and reduced utilization of sugarcane for ethanol production in India.

Meanwhile, the FAO Meat Price Index experienced a 1.0 percent dip from November, dropping 1.8 percent below December 2022 levels due to persistently weak import demands from Asia for pig meat. Regional interest in bovine and poultry meat also slowed despite ample exportable supplies in major producing regions. Ovine meat prices, however, rose in anticipation of holidays.

In contrast to other categories, the FAO Dairy Price Index surged by 1.6 percent from November, albeit remaining 16.1 percent lower than December 2022 levels. 

This monthly rise was driven by increased price quotations for butter and cheese, supported by robust internal sales in Western Europe ahead of the holiday season. Additionally, heightened global import demand led to a rise in international whole milk powder prices.