Global food prices down 2.1% in 2024-FAO

Onome Amuge

World food commodity prices dropped by 2.1 percent in 2024 compared to 2023, according to the United Nations Food and Agriculture Organization (FAO), but they still remain higher than pre-COVID-19 levels.

This is as the FAO  announced that its Food Price Index (FFPI), which tracks international prices of various food commodities, stood at 127.0 points in December 2024, marking a 0.5 percent decrease from the previous month’s level.

The decline was primarily driven by falling prices of sugar, dairy products, vegetable oils, and cereals, with the upward movement of meat prices unable to compensate for the downward trend in these other commodities.

Although the overall decline may signal some relief in global food prices, the index was still 8.0 points or 6.7 percent higher than its corresponding level a year ago.However, when compared to the historic peak recorded in March 2022, the FFPI remained lower, with a gap of 33.2 points or 20.7 percent.

According to the latest FAO report, the FAO Cereal Price Index remained largely unchanged in December 2024, hovering at 111.3 points.

The international cereal markets were marked by a delicate balance between upward and downward pressures in December 2024, according to the FAO report. On one hand, subdued global demand and the increased seasonal availability of cereals from Argentina and Australia’s recent harvests put downward pressure on prices, indicating that the market was well-supplied and not facing significant demand-side challenges. On the other hand, poor winter crop conditions in Russia led to concerns over supply, which put upward pressure on prices.

The FAO report indicates that world maize prices inched up marginally during December 2024 due to a confluence of factors, primarily centered on changes in supply and demand dynamics within the global maize market.

The FAO report indicates that prices of various coarse grains showed mixed movement in December 2024, with barley prices rising while those for sorghum declined. The All Rice Price Index also declined slightly, primarily due to reduced demand for some varieties of rice such as Indica and fragrant rice. This decline was consistent with the overall trend of subdued demand for cereals in general, which was a key factor driving down prices of major cereals like wheat and coarse grains during the year.

The FAO All Rice Price Index rose to a nominal 16-year high in 2024, averaging 133.1 points. This 0.8 percent increase from the index’s average in 2023 was primarily driven by elevated Indica quotations, which reflect strong import demand from countries in Asia. Reduced competition among exporters during the first nine months of 2024 also helped to maintain these high prices.

The FAO Vegetable Oil Price Index exhibited a slight decrease in December 2024, falling by 0.5 percent from its previous month’s level, but remaining 33.5 percent higher than its value in December 2023. This decline was primarily due to lower prices of key vegetable oils such as soy, rapeseed, and sunflower oil, which more than offset slightly higher palm oil prices during the month.

In contrast to the upward trend in international palm oil prices in December 2024, global soyoil prices declined moderately, driven by an anticipation of abundant global supplies and somewhat weaker demand in the U.S. Similarly, world rapeseed and sunflower oil prices also fell due to reduced demand, reflecting the overall trend of subdued demand for vegetable oils during this period.

The FAO Vegetable Oil Price Index stood at 138.2 points for the entirety of 2024, reflecting a 9.4 percent increase from the index’s value in 2023.

The FAO Meat Price Index rebounded in December 2024, rising by 0.4 percent from its November level, after three consecutive months of decline. The index stood at 119.0 points, registering a 7.1 percent increase from its value in December 2023. This increase was primarily attributable to higher prices for bovine meat, as strong global demand coupled with production constraints in major exporting countries resulted in tight supplies, driving up prices for beef.

In December 2024, pig meat prices decreased, reflecting weaker-than-expected consumer demand in the European Union during the holiday season. This decline was in stark contrast to the upward trend in bovine meat prices during the month. Meanwhile, poultry meat prices also recorded a slight decrease, due to ample export supplies from Brazil, which added to the prevailing downward pressure on poultry prices.

Over the entire year of 2024, the FAO Meat Price Index averaged 117.2 points, representing a 2.7 percent increase from its value in 2023.

The FAO Dairy Price Index declined for the first time in seven months during December 2024, falling by 0.7 percent from its previous month’s level. Despite this, the index remained 20.2 points or 17.0 percent higher than its value in December 2023, reflecting the overall upward trend in dairy prices during the year.

Over the entirety of 2024, the FAO Dairy Price Index recorded an average value of 129.6 points, representing a 4.7 percent increase from its value in 2023. This upward trend was primarily driven by a sharp surge in butter prices, resulting from strong global demand coupled with constrained exportable supplies. Erratic weather patterns during the year negatively impacted milk production in several key dairy-producing countries, leading to a tightening of global butter supplies.

The FAO Sugar Price Index dropped for the second consecutive month in December 2024, registering a 5.1 percent decline from its November level and standing 10.6 percent below its value in the corresponding month a year earlier.

The decline in global sugar prices during December 2024 was primarily attributable to an increase in sugar production in Brazil during the second half of November 2024, exceeding initial expectations. The weakening of the Brazilian real against the U.S dollar added to this downward pressure on prices, as the currency devaluation made Brazilian sugar exports more competitively priced in global markets.

In addition, improving prospects for sugarcane crops to be harvested from April 2025 in Brazil, and the ongoing crushing season in India and Thailand, with mills operating at full capacity, also contributed to the decline in world sugar prices.

In 2024 as a whole, the FAO Sugar Price Index averaged 125.8 points, reflecting a 13.2 percent decline from its corresponding value in 2023.

This decrease was largely driven by record-high exports from Brazil during the year, which resulted in an increase in global sugar supplies. In addition, positive global supply prospects for the 2024/25 season also contributed to this downward pressure on sugar prices.