FAO Food Price Index Ends 2011 With Sharp Decline

January 12, 2012 12:10 AM
 

The United Nation's Food and Agriculture Organization (FAO) says it's Food Price Index dropped 5 points in December to 211 -- 27 points below its peak in February 2011.

The decline was driven by sharp falls in international prices of cereals, sugar and oils due to bumper 2011 crops coupled with slowing demand and a stronger US dollar. "However, although prices dropped steadily in the second half of 2011, the Index averaged 228 points in 2011 — the highest average since FAO started measuring international food prices in 1990. The previous high was in 2008 at 200 points," says FAO.

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Additional details:

  • The FAO Cereal Price Index averaged 218 points in December, down 4.8% (11 points) from November. Record crops and improved supply outlook resulted in sizable declines in prices of major cereals during December, with maize prices falling by 6%, wheat by 4% and rice by 3%. In 2011, the FAO cereal price index averaged 247 points, up as much as 35% from 2010 and the highest since the 1970s.

  • The FAO Oils/Fats Price Index stood at 227 points in December, down 3% (7 points) from November and well below the corresponding value recorded one year ago (264 points). Larger than expected overall supplies of vegetable oil have led to a rise in stocks (notably of palm and sunflower oil), which, together with poor global demand for soybeans, explain the downward adjustment in prices.

  • The FAO Meat Price Index averaged 179 points in December, slightly down compared with November. The decline was mainly on account of pig meat, whose price dropped by 2.2%, with sheep meat also receding somewhat. By contrast, poultry and bovine meat prices recorded mild gains. On an annual basis, meat prices in 2011 were 16% higher than in 2010, with all meat types making inroads, especially ovine meat.

  • The FAO Dairy Price Index averaged 202 points in December, almost unchanged from the previous month. All dairy products were up slightly with the exception of butter, which dropped by 1%. Over the whole year, dairy products were on average 10% dearer than in 2010, with particularly strong gains witnessed for skim milk powder and casein, which gained 17% each. More modest increases were seen for butter and whole milk powder prices, which progressed by 11%, and cheese, by 8%.

  • The FAO Sugar Price Index declined for the fifth consecutive months to 327 points in December, down 4% (13 points) from November and 18% (73.5 points) from its July 2011 peak. The recent months’ weakness mostly reflects expectations of a large world production surplus over the new season, on the back of good harvests in India, the EU, Thailand and the Russian Federation.


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