Statistics released this month by the United Nation’s Food and Agriculture Organization (FAO) reveals global food prices fell in December after three months of stability. The decline was largely driven by continued large supplies and record stocks combined with a stronger U.S. dollar and falling oil prices contributed to the decline.
The FAO Food Price Index, measuring the monthly change in international prices of a basket of food commodities, 188.6 points in December 2014, down 3.2 points (1.7 percent) from November.
Looking at prices for the full year 2014, the index averaged 202 points, down 3.7 percent from 2013, with the sharpest year-on-year falls registered by cereals (12.5 percent), followed by dairy products (7.7 percent), oils (6.2 percent) and sugar (3.8 percent). Only the FAO meat price index saw an increase, advancing by 8.1 percent compared to 2013.
The Cereal Price Index averaged 183.9 points in December, up 0.4 percent from November as wheat prices rose on the back of worries that Russia may restrict exports. However, the increase was capped by the stronger U.S. dollar. Moreover, rice prices fell markedly amid abundant export supplies.
The Vegetable Oil Price Index average declined by 2.4 percent to a five-year low of 161 points in December, due mainly to depressed demand for palm oil as a biodiesel feedstock, itself linked to falling global oil prices.
The Dairy Price Index declined by 2.3 percent to 174 points, its lowest level since late 2009, as slowing imports by China and Russia left abundant export supplies for international markets. Price declines were greatest for milk powders, butter and cheese.
The Meat Price Index also declined in December, down 1.9 percent from the previous month, as a stronger U.S. dollar curbed price quotations for beef and mutton from Oceania and pork from Europe. However, at 204 points, this index is near its monthly all-time highs, and on a full-year basis rose 8.1 percent in 2014 from 2013, the only commodity group to post higher average prices over the year.
The Sugar Price Index dropped 4.8 percent to 219 points in December, largely because of ample supplies in major producing countries such as Brazil. Falling crude oil prices, which reduce demand for sugar crops to be converted into ethanol, also weighed on international sugar quotations in December.