FAO Food Price Index hits a three-year high

FAO Food Price Index hits a three-year high in 2020, following additional gains in December

The FAO Food Price Index (FFPI) is a measure of the monthly change in international prices of a basket of food commodities. 

The FAO Food Price Index (FFPI) averaged 107.5 points in December 2020, up 2.3 points (2.2 percent) from November, marking the seventh month of consecutive increase. Except for sugar, all sub-indices of the FFPI registered modest gains in December, with the sub-index of vegetable oil again rising the most, followed by that of dairy, meat and cereals. For 2020 as a whole, the FFPI averaged a three-year high of 97.9 points, 2.9 points (3.1 percent) higher than in 2019, but still well below its peak of 131.9 points registered in 2011. 

• The FAO Cereal Price Index averaged 115.7 points in December, up 1.3 points (1.1 percent) from November, marking the sixth consecutive monthly rise. Wheat export prices rose further in December, reflecting tightening supplies among major exporters, concerns over growing conditions in parts of the United States of America and the Russian Federation as well as expectations of lower than-earlier-anticipated wheat shipments from the Russian Federation following its announcement of an export tax/quota. 
• The FAO Vegetable Oil Price Index averaged 127.6 points in December, gaining 5.7 points (or 4.7 percent) month-on-month and marking the highest level since September 2012. December’s continued strength was mainly driven by firming palm oil values, while those of soy, rapeseed and sunflower seed oil also increased. International palm oil prices rose for a seventh successive month, chiefly reflecting lingering supply tightness in major producing countries. In addition, export flows were affected by a sharp increase in export duties in Indonesia, the world’s leading palm oil supplier. As for soy oil, international prices reached seven-year highs, mainly on account of reduced export availabilities in Argentina, where prolonged strikes affected crushings and port logistics. While rapeseed and sunflower seed oil drew strength from the firmness of the palm oil market, their prices also received support from robust global import demand. For the year as a whole, the FAO Vegetable Oil Price Index averaged 99.1 points, up 15.9 points (or 19.1 percent) from 2019 and marking a three-year high.
• The FAO Dairy Price Index averaged 108.8 points in December, up 3.4 points (3.2 percent) from November and representing the seventh continuous monthly rise. International prices of all milk products that constitute the index increased in December, underpinned by strong global import demand. High internal demand and lagging production of some milk products in Western Europe also provided support. However, for 2020 as a whole, the FAO Dairy Price Index averaged 101.8 points, down 1.0 point (1.0 percent) from 2019. Among the different milk products, butter prices registered the sharpest fall, followed by whole milk powder, while prices of skim milk powder and cheese increased.
• The FAO Meat Price Index averaged 94.3 points in December, up 1.6 points (1.7 percent) month-on-month, but still 12.3 points (11.6 percent) below its year-earlier value. December marked the third consecutive monthly increase in the value of the index. Poultry meat quotations rebounded in December buoyed by a combination of increased import demand, especially from the Middle East, high internal sales in key producing countries, and the adverse production impact of avian influenza outbreaks in Europe. Beef and lamb quotations increased too. By contrast, pork prices fell slightly, as exports to main Asian markets from leading European producers, especially Germany, remained suspended over African swine fever outbreaks. For the year as a whole, the FAO Meat Price Index averaged 95.5 points, down 4.5 points (4.5 percent) from 2019. Across different meat categories, poultry meat prices registered the biggest fall, followed by those of ovine, pig and bovine meats. 
• The FAO Sugar price index averaged 87.0 points in December, retreating slightly (0.5 points) from the marked increase recorded in November. The relative firmness of sugar prices was influenced by the latest trade data showing sugar imports into China, the world's second largest sugar importer, surging by 37 percent year-on-year between January and November 2020. For the year as a whole, the FAO Sugar Price Index averaged 79.5 points, up 0.9 points (or 1.1 percent) from 2019, reflecting a tighter world sugar market in 2020.