World food prices were virtually unchanged in December, with firmer cereal prices helping offset declines in dairy and sugar quotations, the United Nations food agency said.
The Food and Agriculture Organization's (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 161.7 points last month against 161.6 in November.
In 2018 the index averaged 168.4 points, down 3.5 percent from 2017 and almost 27 percent below the highest level of 230 points reached in 2011, FAO said.
“Sugar values dropped the most in 2018, with also vegetable oil, meat and dairy prices registering year-on-year decreases. However, international prices of all major cereals rose in 2018,” FAO said.
The FAO Cereal Price Index increased 1.8% in December 2018 over November 2018 and jumped 9.6% above December 2017. Wheat prices were up slightly in December, mostly supported by harvesting concerns in Argentina due to untimely rains and tightening export supplies in the Russian Federation. However, strong competition for exports limited the rise in prices.
International maize prices also rose in December, amid firm global demand coupled with weather concerns in the southern hemisphere. By contrast, international rice prices subsided for the sixth successive month, pressured further by a quiet pace of trade.
Over the whole of 2018, the FAO Cereal Price Index increased 9.0% above 2017 but still remained 31% below its peak reached in 2011. Falling world output of wheat and maize contributed to the increase in prices during 2018, although overall global supplies of all the major cereals remained more than sufficient, leaving inventories still at high levels.
The FAO Vegetable Oil Price Index rose marginally by 0.4% in December 2018 from the previous month and marking the first rebound after ten consecutive falls. The slight recovery was driven by higher palm oil prices, which reflect both rising domestic demand in major producing countries and firmer global import demand. By contrast, international soy and rapeseed oil prices continued to drift downward on account, respectively, of ample supplies in the US and weak demand in the EU. Falling mineral oil prices also weighed on vegetable oil values.
For the year as a whole, the FAO Vegetable Oil Price Index dipped 15% from 2017 and reaching the lowest level since 2007, with palm oil prices registering the largest decline amid weak global demand accompanied by an accumulation of stocks in major producing countries.
The FAO Sugar Price Index declined 1.9% from November. International sugar prices fell under renewed downward pressure, in part because of reportedly faster growth in sugar production in India in recent months. Falling international prices of crude oil also contributed to the slide in sugar quotations, as lower energy prices tend to reduce the use of sugarcane to produce ethanol, resulting in more supplies for the production of sugar, notably in Brazil, the world's largest sugar producer.
Overall for 2018, the Index fell by almost 22% year-on-year, underpinned by ample world production and accumulating inventories.