Global Food Prices Fell By 3.7 Percent In 2014 (2)

ISTANBUL, January 8 (DHA) - Global food prices fell by 3.7 percent in 2014, for the third consecutive annual decline, according to the Food Price Index of the Food and Agriculture Organization (FAO) of the United Nations, released by the FAO on Thursday.

"Continued large supplies and record stocks combined with a stronger US dollar and falling oil prices contributed to the decline" said in the FAO statement.

Lower crude oil prices spelled bearish price trends for commodities that can be used for biofuels, notably sugar but also palm oil, which has the largest weight inside the vegetable oils index, said FAO senior economist Abdolreza Abbassian.

"Ample supplies aside, the drop in oil prices obviously makes ethanol production less attractive," he said.

The December Food Price Index averaged 188.6 points, a drop of 1.7 percent from November, led down by sugar and palm oil, which had been in a downward trend between March and September, remained fairly stable in October and November, before falling again in December.

This year-on-year drop came despite FAO's sub-index for meat rising to an all-time high annual average of 199 points, up 8.1 percent from 2013. Cereals, by contrast, dropped 12.5 percent from the previous year, buoyed by forecasts of record production and ample inventories.

FIVE-YEAR LOW LEVELS
FAO's Food Price Index is a trade-weighted index that tracks prices of five major food commodity groups on international markets. It aggregates price sub-indices of cereals, meat, dairy products, vegetable oils and sugar. Four of those indices fell in 2014 and are at, or close to, their lowest levels in five years.

ONLY MEAT RECORDED AN INCREASE
Over the full year, the Index averaged 202 points, down 3.7 percent from 2013, with the sharpest year-on-year falls registered by cereals with 12.5 percent, followed by dairy products with 7.7 percent, vegetable oils with 6.2 percent and sugar with 3.8 percent. Only the FAO Meat Price Index recorded an increase in the year 2014, advancing by 8.1 percent compared to 2013.

CEREALS
The FAO Cereal Price Index averaged 183.9 points in December, up slightly at 0.4 percent from November, primarily driven by a rise in wheat prices which more than offset a decline in rice quotations. Worries about the possible introduction of restrictive export measures by the Russian Federation pushed up wheat prices although a general strengthening of the US dollar and weak trade activity limited the increase.

VEGETABLE OIL
The FAO Vegetable Oil Price Index averaged 161 points in December, down 4 points, at 2.4 percent from November. The drop in the index mainly reflects developments in the palm oil market, as the recent slump in crude oil prices depressed demand for palm oil as a biodiesel feedstock, causing international palm oil values to weaken.

DAIRY
The FAO Dairy Price Index averaged 174 points in December, down 4.1 points, at 2.3 percent from November. Abundant export supplies continued to weigh on international prices in December.This fall has stemmed from increased export availability and a reduction in the pace of purchases by some of the leading importers, especially China and the Russian Federation.

MEAT INDEX
The FAO Meat Price Index averaged 204 points in December, a reduction of 4 points, at 1.9 percent, from November, reflecting weaker quotations for bovine and ovine meat from Oceania and lower pigmeat prices from Europe. The stronger US dollar and a growth in export availability were among the main factors influencing prices

SUGAR
The FAO Sugar Price Index averaged 219 points in December, down 11 points, at 4.8 percent, from November 2014. Ample supplies in major sugar producing countries, including Brazil, the world’s largest producer and exporter, and falling crude oil prices, which reduce the volume of sugar crops being converted into ethanol, weighed on international sugar quotations in December.

(PHOTO AND GRAPHS)