Monthly Global Food Prices Rose in December on a Surge in Dairy

January 9, 2014 06:15 AM

The FAO’s dairy price index rose to the highest level since November 2007, largely on Chinese demand for milk powder.

World food prices rose in December as a surge in the cost of dairy to the highest level since 2007 more than made up for falling charges of grains and cooking oils, the United Nations’ Food & Agriculture Organization said.

An index of 55 food items rose to 206.7 points last month from a restated 206.4 in November, the Rome-based FAO wrote in an online report today. The index of international food prices is down 3.5 percent from a year earlier.

The FAO’s dairy price index rose to the highest level since November 2007. Chinese demand for milk powder is pushing Southern Hemisphere dairy processors to focus on that product, lifting prices for butter and cheese, the FAO said.

"A sharp increase in dairy prices and firming meat values largely balanced out a steep decline in sugar quotations and lower cereal and oil prices," the FAO wrote.

Cheddar cheese prices in Oceania were up 8.9 percent as of Jan. 2 from a month earlier, while butter increased 8.8 percent and skim-milk powder 3.8 percent, according to quotations tracked by the U.S. Department of Agriculture.

The FAO’s grain-price index fell to 191.5 points from 194.3 points, its lowest level since August 2010. Corn was the worst performer in the S&P GSCI gauge of commodities last year, sliding 40 percent on an outlook for a record global crop.

The vegetable-oil price index fell to 196 from 198.5 and the sugar-price gauge slumped to 234.9 points from 250.6 points. The sugarcane harvest in Brazil, the biggest producer, exceeded expectations, the UN agency said.

An index of meat prices rose to 188.1 points from 187.3 points, reaching the highest level since November 2011, the FAO reported. Beef and pork prices increased, it said.

"Demand from China and Japan have resulted in beef prices showing consistent growth since the middle of the year," according to the organization.

The index averaged 209.9 points last year, the third- highest value on record after 213.4 points in 2012 and 230.1 points in 2011, the FAO said. The dairy and meat price indexes rose to a record in 2013, according to the report.

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