The Food and Agriculture Organization (FAO) of the United Nations, which tracks monthly changes in international prices of commonly traded food commodities, reports a dip in food prices in December as vegetable oils and sugar take a pounding.

“While normally high prices are expected to give way to increased production, the high cost of inputs, the ongoing global pandemic and ever more uncertain climatic conditions leave little room for optimism about a return to more stable market conditions even in 2022, ” says FAO senior economist Abdolreza Abbassian.

The dairy sub-index alone posted a monthly rise in the last month. The FAO Food Price Index averaged 133.7 points in December, a 0.9% decline from November, still up 23.1% from December 2020. 

For 2021 as a whole the index averaged 125.7 points, about 28.1% above the previous year. 

Cereal and oil indexes perform well overall 
The FAO Cereal Price Index decreased 0.6% from November, as falling wheat exports offset firmer maize prices following good harvests in the southern hemisphere. These prices are underpinned by strong demand and concerns over persistent dryness in Brazil.

Diverse and well-connected agri-food systems are better equipped to absorb sudden shocks like COVID-19 and secure food supply, the FAO recently urged.Falling wheat exports offset firmer maize prices.falling wheat exports offset firmer maize prices 

The Cereal Price Index did, however, reach its highest annual level since 2012 and averaged 27.2% higher than in 2020.

Maize is up 44.1%, wheat is up 31.3% and rice down dipped by 4%. The barometer of food commodity prices in international markets rose for the fourth consecutive month in November, led by strong demand for wheat and dairy products.

The FAO Vegetable Oil Price Index declined 3.3% in December, with weaker quotations for palm oil and sunflower oil. The prices reflect the subdued global import demand that have linked to concerns over the impact of rising COVID-19 cases.

For 2021 as a whole, the FAO Vegetable Oil Price Index reached an all-time high, increasing 65.8% from 2020.

Sugar, meat and dairy indexes peak
The FAO Sugar Price Index reached a low for the fifth consecutive month with a 3.1% decrease. Concerns over the possible impact of the Omicron COVID-19 variant, a weaker Brazilian Real and lower ethanol prices on global demand have been cited as possible causes, the FAO reports.

For 2021 as a whole, the FAO Sugar Price Index rose 29.8% from the previous year to its highest level since 2016.

The FAO Meat Price Index was stable in December. For 2021 as a whole, this index was 12.7% higher than in 2020. Global food trade accelerated and was poised to hit a record in volume and value terms in November.Sugar prices have been low for the past five months. 

The FAO Dairy Price Index was the only sub-index to increase in December, rising 1.8% from the previous month. International quotations for butter and milk powders increased amid lower milk production in Western Europe and Oceania, accounting for the sub-index increase. This index averaged 16.9% higher than in 2020. 

Cheese prices declined marginally, reflecting a preference for Western Europe dairy producers.

In July of 2021, global food commodity prices fell for the second consecutive month. The July drop reflected a decline in the quotations for most cereals and vegetable oils as well as dairy products.