Global food prices hit 3-year high, led by dairy demand

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 107.5 points in December, 2.2% higher than in November. Over the whole of 2020, the index averaged 97.9 points, a three-year high and a 3.1% increase from 2019 although still more than 25% below its historical 2011 peak.

The Cereal Price Index averaged 115.7 points in December, up 1.3 points (1.1%) from November, marking the sixth consecutive monthly rise. Export prices for wheat, maize, sorghum and rice all rose in December, moving higher in part due to concerns over growing conditions and crop prospects in North and South America as well as the Russian Federation. On an annual basis, rice export prices were 8.6% higher in 2020 than in 2019, while those for maize and wheat were 7.6% and 5.6% higher, respectively.

The Vegetable Oil Price Index averaged 127.6 points in December, gaining 5.7 points (4.7%) month-on-month and marking the highest level since September 2012. In addition to ongoing supply tightness in major palm oil producing countries, international trade was affected by a sharp hike in export duties in Indonesia. International prices for soy oil rose in part due to prolonged strikes in Argentina that impacted both crushing activity and port logistics. The Vegetable Oil Price Index averaged 19.1% higher in 2020 than the previous year, marking a three-year high.

The Dairy Price Index averaged 108.8 points in December, up 3.4 points (3.2%) 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, mostly induced by concerns over the adverse impacts of drier and warmer weather conditions on Oceania’s milk production. High internal demand and lagging production of some milk products in Western Europe also provided support. For 2020, the Dairy Price Index averaged 101.8 points, down 1 point (1%) 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 Sugar Price Index averaged 87 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% year-on-year between January and November 2020. Indonesia also reported increased demand for refined sugar from the food and beverage industry. For the 2020, the Sugar Price Index averaged 79.5 points, up 0.9 points (or 1.1%) from 2019, reflecting a tighter world sugar market in 2020.

The Meat Price Index averaged 94.3 points in December, up 1.6 points (1.7%) month-on-month, but still 12.3 points (11.6%) below its 2019 value. Poultry meat quotations rebounded in the final month of the year, buoyed by increased import demand, especially from the Middle East, high internal sales in key producing countries and the adverse impact of avian influenza outbreaks in Europe. Pig meat prices fell slightly, influenced by the suspension of German exports to Asian markets because of African Swine Fever outbreaks. For 2020, the Meat Price Index averaged 95.5 points, down 4.5 points (4.5%) from 2019. Across different meat categories, poultry meat prices registered the biggest fall, followed by those of ovine, pig and bovine meats.