2020 UN Food and Agriculture Organization Food Price Index hits three-year high

Rome-Food and Agriculture Organization of the United Nations released a report on January 7, showing that, driven by the prices of dairy products and vegetable oils, global food prices continued to rise in December 2020, rising for the seventh consecutive month.

The Food and Agriculture Organization of the United Nations Food Price Index is used to measure the changes in the international prices of the most active food commodities in global trade. In December 2020, the index averaged 107.5 points, an increase of 2.2% from the previous month. For the whole year of 2020, the food price index averaged 97.9 points, a three-year high, up 3.1% from 2019, but lower than the peak level of 131.9 points in 2011 by more than 25%.

The Food and Agriculture Organization’s Grain Price Index rose 1.1% in December compared to November, and the 2020 annual average is 6.6% higher than in 2019. Export prices of wheat, corn, sorghum and rice all strengthened in December, partly due to concerns about crop growth conditions and harvest prospects in North America, South America and Russia. For the whole year of 2020, the export price of rice increased by 8.6% year-on-year, and the export prices of corn and wheat increased by 7.6% and 5.6% respectively.

The UN Food and Agriculture Organization’s Vegetable Oil Price Index rose 4.7% month-on-month in December, the highest since September 2012. Supply from major palm oil producing countries continues to be tight, and Indonesia’s sharp increase in export taxes has also affected international trade. In addition, due to the continuation of the strike in Argentina, the country's oil mills and port logistics have been affected, which has also partially boosted international soybean oil prices. For the whole year of 2020, the UN Food and Agriculture Organization's vegetable oil price index increased by 19.1% over the previous year.

The Food and Agriculture Organization of the United Nations Dairy Product Price Index rose 3.2% month-on-month in December, marking the seventh consecutive month of increase. Due to concerns about drought and high temperature conditions affecting milk production in Oceania, strong global import demand, coupled with strong domestic demand in Western Europe, the prices of all dairy products have risen this month. However, for the whole of 2020, the UN Food and Agriculture Organization's dairy product price index dropped 1.0% from 2019.

The Food and Agriculture Organization’s meat price index rose 1.7% month-on-month in December, but the annual average fell 4.5% from 2019. The price of poultry meat has rebounded this month. On the one hand, it is due to strong import demand, especially from the Middle East. At the same time, domestic sales in key producing countries are also at a high level. On the other hand, the European bird flu epidemic also has a negative impact on production. . Due to the African swine fever epidemic, Germany is still unable to export pork to the Asian market, and pork prices have fallen slightly.

The Food and Agriculture Organization's sugar price index rose in November, but it slightly corrected 0.6% month-on-month in December. For the whole year of 2020, the sugar price index will increase by 1.1% on average compared with 2019. Behind the stable price is strong import demand: China's import volume will increase significantly in 2020, and the demand for refined sugar in the Indonesian food and beverage industry is also rising. Despite the positive outlook for production in Brazil and India, sugar prices have withstood downward pressure.

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