Global food commodity prices decline in December led by sharp drop in sugar quotations

08 Jan 2024 --- World food commodity prices end in 2023 about 10% below their year-earlier level, with the most notable decrease observed in international sugar quotations.

According to the Food and Agriculture Organization of the United Nations (FAO) Food Price Index, the average index value stood at 118.5 points in December, 2023. This figure represents a 1.5% decline from November and a 10.1% decrease compared to December 2022. 

Over the entirety of 2023, the index fell by 13.7% from the preceding year’s average. The international sugar price index was the only category to register a higher average over this period.

Rice on the rise
The FAO Cereal Price Index saw a 1.5% increase from November, influenced by rising prices for wheat, maize, rice, and barley. This uptick is partially attributed to logistical challenges that impacted shipments from major exporters. 

Despite this monthly increase, the annual average for the index in 2023 was 15.4% lower than in 2022, reflecting an adequately supplied global market. 

However, the FAO’s All Rice Price Index, a component of the Cereal Price Index, marked a 21% increase due to “concerns about the impact of El Niño on rice production and in the aftermath of export restrictions imposed by India.”

Ovine meat prices rebounded following two months of consecutive drops due to stronger demand of holidays and a decline in slaughter supplies.The FAO Vegetable Oil Price Index decreased by 1.4% from November. This decline was driven by reduced demand for palm, soy, rapeseed, and sunflower seed oil. Annually, the index for 2023 decreased 32.7% from the previous year.

FAO says: “The slowdown in soy oil purchases was particularly impacted by a slowdown in demand from the biodiesel sector as well as improving weather conditions in major growing areas of Brazil.”

Changes amid holiday season 
A change was seen in the FAO Sugar Price Index, which went down 16.6% from November to a nine-month low. Despite this, the index was still 14.9% higher than in December 2022. 

FAO says: “The plunge in sugar quotations was mainly driven by the strong pace of production in Brazil, along with reduced use of sugarcane for ethanol production in India.”

The FAO Meat Price Index marginally dipped by 1.0% from November and was 1.8% lower than December 2022. FAO suggests the situation was mainly due to weak import demand from Asia for pig meat and slower regional buying interest for bovine and poultry meat, despite ample supplies. Contrarily, ovine meat prices increased in anticipation of holiday demand.

Defying the overall downward trend, the FAO Dairy Price Index rose by 1.6% from November but was still 16.1% below its value in December 2022. This increase was propelled by higher price quotations for butter and cheese, buoyed by robust internal sales in Western Europe during the holiday season and strong global demand for whole milk powders.

Edited by Sichong Wang