World food commodity prices experienced a decline in December 2023, marking a 1.5% decrease compared to the previous month, as per the latest report from the Food and Agriculture Organization of the United Nations (FAO). The FAO Food Price Index (FFPI), which tracks monthly changes in the international prices of a basket of food commodities, averaged 118.5 points in December, representing a 10.1% drop from the same period in 2022.
The most notable decline was observed in international sugar quotations, leading to an overall decrease in the FFPI. Despite this, the index for 2023 was 13.7% lower than the average value in the preceding year, with only the international sugar price index exhibiting an increase.
The FAO Cereal Price Index, a component of the FFPI, showed mixed trends in December. While the index increased by 1.5% from November, it remained 16.6% below its December 2022 value. Wheat export prices rose in December due to weather-related disruptions and tensions in the Black Sea, impacting major exporters. World maize prices strengthened, influenced by concerns about Brazil's second crop plantings and logistical constraints in Ukraine.
The FAO Vegetable Oil Price Index declined by 1.4% in December, reflecting lower world prices across palm, soy, rapeseed, and sunflower seed oils. Soyoil prices, in particular, dropped more than 3% due to a slowdown in demand from the biodiesel sector and improved weather conditions in Brazil. For 2023, the Vegetable Oil Price Index sharply fell by 32.7% from the previous year, reaching a three-year low.
In contrast, the FAO Dairy Price Index witnessed a 1.6% increase in December, marking the third consecutive monthly rise. Higher price quotations for butter, whole milk powder (WMP), and cheese drove this increase. Strong internal sales in Western Europe ahead of the holiday season and increased import demand from the Near East supported these price hikes.
The FAO Meat Price Index, however, decreased by 1.0% in December, with international pig meat prices falling due to weak import demand from Asia. Bovine and poultry meat prices also declined, reflecting less active buying interest in Asia and ample exportable supplies. Ovine meat prices rebounded following two months of consecutive drops.
The FAO Sugar Price Index experienced a significant drop of 16.6% in December, driven by robust production in Brazil and lower returns from ethanol sales. Strong exports from Brazil, coupled with the Indian Government's decision to limit sugarcane use for ethanol production, contributed to the decline. Despite this, the Sugar Price Index for 2023 averaged 26.7% higher than in 2022, reaching the highest value since 2011.
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