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Oversupply and record carryover stocks led to a decline in global food prices in December, said the Food and Agricultural Organization of the United Nations in its latest report.
After three months of stability, the downward move of the prices of the agricultural commodities was supported by falling oil prices and strengthening US dollar.
The December Food Price Index averaged 188.6 points, a drop of 1.7 per cent from November, led down by sugar and palm oil. For the whole of 2014, the Food Price Index averaged 202 points, down 3.7 per cent from 2013, marking a third consecutive annual decline.
Meanwhile, global cereal production in 2014 is estimated at a new record of 2,532 million tonnes (including rice in milled terms), 10 million tonnes higher than last month’s forecast and seven million tonnes (0.3 per cent) above last year’s peak. World cereal stocks is estimated at the close of 2015 marketing seasons to rise by four million tonnes since last month and now stands at 628 million tonnes, 50 million tonnes (8.6 per cent) above their opening levels and the highest since 2000.
This year-on-year drop came despite sub-index for meat rising to an all-time high annual average of 199 points, up 8.1 per cent from 2013. Cereals, by contrast, dropped 12.5 per cent from the previous year, buoyed by forecasts of record production and ample inventories.
The Cereal Price Index averaged 183.9 points in December, up 0.4 per cent from November as wheat prices rose on the back of worries that Russia may restrict exports. However, the increase was capped by the stronger US dollar. Moreover, rice prices fell markedly amid abundant export supplies.
The Vegetable Oil Price Index average declined by 2.4 per cent 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.
Similarly, the Dairy Price Index declined by 2.3 per cent 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.
By contrast, the Meat Price Index also declined in December, down 1.9 per cent from the previous month, as a stronger US 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 per cent in 2014 from 2013, the only commodity group to post higher average prices over the year.
