Situation likely to persist | The Food and Agriculture Organization says crop prices have dropped because of large supplies, while beef and dairy prices have reached record highs
(Reuters) — Global food prices rose slightly in December after staying flat the previous month, says the Food and Agriculture Organization.
However, prices on average declined 1.6 percent in 2013 from the previous year, according to the United Nations’ agency.
The FAO’s price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 206.7 points in December, a marginal rise from a revised 206.4 in November.
The FAO said large supplies pushed down international prices of oil, sugar and cereals except for rice.
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However, the decrease in prices in those markets was balanced by an opposite trend in meat and dairy, which hit records last year, according to the FAO.
FAO senior economist Adores Abbassian said ample supply and good opportunities for rebuilding inventories are likely to continue weighing on cereals prices for the next few months.
“This situation is likely to keep some downward pressure on the grain sector for still some months to come,” Abbassian said.
However, demand-driven increases in meat and dairy prices could taper off.
“Considering how high they are … perhaps the scope for stronger increases in the next few months are much less than in the last few months,” Abbassian said.
Record harvests reduced cereals prices last year, particularly wheat and corn, and the average cereals price index for December was 191.5 points, its lowest since August 2010.
Meanwhile, the dairy price index averaged 243 in 2013, its highest annual average ever, the FAO said. Demand from Japan and China drove up beef in particular, and the meat index was at historically high levels in 2013.
