United Nations: Food commodity prices fall for fifth year in a row, says FAO
Published in SUNS #8381 dated 17 January 2017
Geneva, 16 Jan (Kanaga Raja) -- The prices of key food commodities fell for the
fifth consecutive year in 2016, averaging 161.6 points for the year as a whole,
a decline of 1.5 percent from the previous year, the UN Food and Agriculture
Organisation (FAO) has said.
In its latest Food Price Index, FAO said that while prices of sugar and
vegetable oils rose significantly in 2016, falling prices in cereal, meat and
dairy markets kept the Index below its 2015 average.
The Index averaged almost 172 points in December 2016, unchanged from November
with strong gains in the prices of vegetable oils and dairy largely offsetting
a fall in sugar and meat quotations.
"Economic uncertainties, including movements in exchange rates, are likely
to influence food markets even more so this year," said FAO senior
economist Abdolreza Abbassian.
The FAO's Food Price Index is a trade-weighted index that tracks international
market prices for major cereals, vegetable oils, dairy, meat and sugar.
FAO's Cereal Price Index averaged 142.1 points in December, up just 0.5 percent
from November and broadly stable since September.
According to FAO, international rice prices increased somewhat in December,
sustained by official measures put in place in Thailand to prop-up local prices
and also strong demand for supplies from Pakistan.
While maize quotations also firmed in December, mostly on weather concerns and
brisk demand, wheat values weakened as a result of larger-than-expected
production estimates in Australia, Canada and the Russian Federation as well as
good crop prospects in Argentina.
Overall, said FAO, the Cereal Price Index averaged around 147 points in 2016,
down 9.6 percent from 2015 and as much as 39 percent from its peak in 2011.
The FAO's Vegetable Oil Price Index averaged 183 points in December. The Index
gained 7.4 points (or 4.2 percent) from November and reached its highest level
since July 2014, primarily driven by palm and soy oils.
For palm oil, low global inventory levels and protracted supply tightness
continued to bolster prices, while soy oil quotations firmed on both weather
concerns in Argentina and the prospect of rising uptake by the biodiesel sector
in the United States, Brazil and Argentina.
FAO said that for the year as a whole, the index averaged nearly 164 points, up
11.4 percent from 2015 but well below the values recorded in the preceding five
Meanwhile, the FAO's Dairy Price Index averaged 192.6 points in December, up
6.2 points (3.3 percent) from November, mainly on account of moderate rises for
butter, cheese and Whole Milk Powder (WMP), while quotations for Skimmed Milk
Powder (SMP) remained stable.
Restrained milk production in the European Union and Oceania and buoyant
international and domestic demand continued to underpin the market, said FAO.
While the Index average for 2016 was 4 percent lower than the previous year,
international dairy prices staged a substantial recovery from mid-year onwards,
with butter and WMP recording the largest increases.
The FAO's Meat Price Index averaged 161.5 points in December, 1.8 points (1.1
percent) down from its revised value for November.
Quotations for ovine (lamb and mutton) and bovine meat in particular fell,
while those for poultry and pig meat were only slightly down.
Despite modest growth during the course of the year, the average value of the
Index in 2016 was 7 percent below that of 2015, with the largest falls recorded
for bovine and poultry meats, said FAO.
The FAO's Sugar Price Index averaged 262.6 points in December, down 24.6 points
(8.6 percent) from November.
"The sharp fall in international sugar prices in December was mainly
driven by a continuous weakening of the Brazilian currency (Real) against the
US Dollar, boosting sugar exports from Brazil, the world's largest sugar
producer and exporter."
Reports of higher-than-expected sugar production in 2016/17 (up 18 percent from
2015/16) in the Centre South, Brazil's main producing region, also contributed
to pushing down prices, said FAO.
Overall, however, the FAO Sugar Price Index averaged 255.9 points in 2016, 34.2
percent higher than in 2015, the first yearly rise since reaching a peak of 369
points in 2011.
The sharp increase in 2016 mostly reflected tighter supplies in Brazil, India
and Thailand, said FAO. +