FAO food index third highest

FAO food index third highest

Global food and commodity prices strong in 2013.

FAO food index third highest
THE U.N. Food & Agriculture Organization's (FAO) overall Food Price Index for 2013 averaged 209.9 points — the third-highest annual value on record. The 2013 value was down 1.6% from 2012 and also was well below the index value of 230.1 in 2011 (Figure).

Digging further into the 2013 data, the Food Price Index for the year peaked at 216.5 in the month of April and then declined through September to 203.9. The last quarter showed a slight rebound from September's low to 206.0, where it remained to finish out the year.

Dairy values maxed out as meat prices hit a new record, while large supplies of cereals, oils and sugar — with the exception of rice — kept international prices low.

FAO senior economist Abdolreza Abbassian said 2013 saw "huge surges in prices of commodities, especially ... meat and dairy. In fact, 2013 marked the year where prices were at record levels; this upward pricing has being going on for a number of months, and the reason is demand, especially from Asia."

According to FAO, the global demand for milk powder, particularly in China, remained strong in 2013 and led Southern Hemisphere processors to shift their focus away from butter and cheese.

The dairy price index averaged 264.6 points in December, the highest month for the year. For the entire year, the dairy index averaged 242.9 points, recording the highest annual value ever.

The meat index also remained at a historical high, with the 2013 average of 184.4 beating the previous record in 2011.

Demand from China and Japan contributed to strong growth for beef in the last two quarters of 2013. On the whole, global pork and beef prices climbed, poultry prices were stable and sheep meat prices moved lower.

As a result of good harvests, cereal and sugar prices were down.

"Prices for some of the commodities in the index, for example cereals or sugar, have plunged sharply during the 2013 period simply because the supply situation is improving; with production near record levels, this supply recovery has resulted in a price correction," Abbassian said.

The cereal price index started the year at 244.0 points and steadily decreased each month to end at 191.5. However, the yearly average for cereals was 219.2 points, a 7.2% decline from 2012.

Sugar prices in 2013 were 18% lower than the previous year. FAO reported consecutive monthly declines in the last quarter, with the world's largest sugar producer and exporter, Brazil, exceeding expectations for its sugarcane harvest.

The vegetable oil price index averaged 193 points for 2013 and was down 31 points from 2012, with palm oil hitting a four-year low.

The FAO Food Price Index is a measure of monthly changes in international prices of major food crops and commodities.

Looking into 2014, Abbassian said projections are for a more comfortable situation for the international food market, especially in the first half of 2014, due mainly to lower prices for food crops.

Volume:86 Issue:03

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