The FAO Food Price Index (FFPI) is a measure of the monthly variation in international prices of a basket of food commodities. On the other hand, the price of cereals has collapsed.

Global food prices have decreased

The FAO Food Price Index* (FFPI) stood at 118.5 points in December 2023, down by 1.8 points (1.5 percent) from the November level, as declines in sugar, vegetable oils, and meat prices offset more than the increase in dairy and cereal products. The index was 13.3 points (10.1 percent) below its level a year ago. For the whole of 2023, the index recorded 124.0 points, 19.7 points (13.7 percent) lower than the average value in 2022.

Cereals, 16.6% cheaper

The FAO Cereal Price Index averaged 122.8 points in December, up by 1.8 points (1.5 percent) from November but still 24.4 points (16.6 percent) below its value in December 2022.

After declining for four consecutive months, wheat export prices increased in December, supported by weather-related logistic disruptions in some major exporters and tensions in the Black Sea amid strong demand.

World corn prices also strengthened in December, supported by concerns about Brazil's second corn crop and logistical constraints hindering shipments from Ukraine. Among other coarse grains, global barley prices increased, while sorghum prices fell slightly. In December, the FAO Rice Price Index increased by 1.6% compared to November.

For the entire year, the FAO Cereal Price Index was 130.9 points in 2023, down by 23.8 points (15.4%) from the record annual average in 2022, reflecting well-supplied global markets.

The FAO Vegetable Oil Price Index averaged 122.4 points in December, down by 1.7 points (1.4 percent) from the previous month after a brief increase in November.

Declines in oils and soybeans

The decline in the price index reflected lower global prices for palm oil, soybean, rapeseed, and sunflower oils, supported by modest purchases from importers despite lower seasonal productions in major producing countries.

Meanwhile, world soybean oil prices fell by over 3% from November due to slowing demand from the biodiesel sector, as well as improved weather conditions in certain parts of the main growing regions in Brazil.

International prices of rapeseed and sunflower oils declined due to global import demand.

For the whole of 2023, the FAO Vegetable Oil Price Index was 126.3 points, sharply down (by 61.5 points or 32.7 percent) from 2022, marking a three-year low amid improved global supplies.

Decline in the sugar market

The FAO Sugar Price Index averaged 134.6 points in December, down by 26.8 points (16.6 percent) from November, marking the lowest level in the past nine months but remaining 17.5 points (14.9 percent) above the level recorded in the same month last year.

The December decline in international sugar quotations was mainly driven by the strong pace of production in Brazil, supported by favorable weather conditions. Strong exports from Brazil, along with lower revenues from ethanol sales, contributed to the overall decline in global sugar prices.

Additionally, the Indian Government's decision to limit the use of sugarcane for ethanol production in the current season exerted additional downward pressure on prices.

For the whole of 2023, the FAO Sugar Price Index averaged 145 points, up by 30.6 points (26.7 percent) from 2022 and the highest value since 2011, mainly due to concerns about a tighter global sugar balance.

You can check the global cereal price trend in the opening image of this news.