The United Nations’ Food and Agriculture Organization (FAO) Food Price Index held steady in December 2013, with a sharp increase in dairy prices and firming meat values largely balancing out a steep decline in sugar quotations and lower cereal and oil prices. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of five food commodities – cereal, vegetable oil, dairy, meat and sugar.

The December FAO Dairy Price Index rose 5.2% from November. Demand for milk powder, especially from China, remained strong, and processors in the southern-hemisphere focused on this product rather than on butter and cheese. As a result, in context of light trading and most supplies being already committed, prices of the butter and cheese rose more than those for milk powder. During 2013, the Dairy Index averaged 243 points, its highest annual value since its inception, thereby exceeding the previous maximum of 230 points reached in 2011.

The FAO Meat Price Index rose slightly in December, with prices for beef and pork moving higher. Demand from China and Japan resulted in beef prices showing consistent growth since the middle of the year. Prices for poultry were stable, while those for lamb and mutton moved lower, which coincided with the seasonal slaughter peak in the southern-hemisphere. In 2013, the Meat Price Index remained at historically high levels.

Over the full 2013 year, the total FAO Food Price Index was down 1.6% from 2012, but still the third highest annual value on record. Large supplies pushed down international prices of cereals (with the exception of rice), oils and sugar. However, dairy values peaked in 2013, while meat also hit a record.