World food prices ended a somewhat depressed year on a
stagnant note, the United Nations said – although it prepared consumers for the
potential for more volatile movements ahead.
Food prices were flat month on month in December, with a "sharp",
8.6% fall in sugar prices offsetting growth in dairy and vegetable oil values, said
the UN food agency, the Food and Agriculture Organization.
Average values for 2016 fell for a fifth successive year, although
by a modest 1.5%.
"Bumper harvests and prospects for staple cereals offset
upward pressure on FAO's food price index from tropical commodities such as
sugar and palm oil, where production was impacted by El Nino," the agency said.
However, the agency flagged the potential for greater price
volatility ahead for world which is facing changes including the election of a
US president with a somewhat radical agenda, and the ongoing ructions in Europe
"Economic uncertainties, including movements in exchange
rates, are likely to influence food markets even more so this year," said Abdolreza
Abbassian, FAO senior economist.
The FAO highlighted, for instance, how currency moves had
already played a large role in December's sugar price slump, on top of reports
of bigger-than-expected output of the sweetener in Brazil.
"The sharp fall in international sugar prices in December
was mainly driven by a continuous weakening of the Brazilian real against the
US dollar, boosting sugar exports from Brazil, the world's largest sugar
producer and exporter," the agency said.
The headline annual average price data, showing continued
decline in food prices in 2016, also disguised a trend of recovery in values
over the year, with the FAO's index ending the year 12.0% above where it
Vegetable oil prices appreciated most strongly over the
year, by 29.3%, boosted by the dent to palm oil output from dryness, blamed on
El Nino, in South East Asia, where demand was spurred too by moves to encourage
the use of the commodity in biodiesel.
Dairy prices grew by 28.8%, staying "a substantial recovery
from mid-year onwards, with butter and whole milk powder recording the largest
increases", the agency said.
In December, "restrained milk production in the EU and
Oceania and buoyant international and domestic demand continued to underpin the
The worst performing segment of the FAO food price index was
cereals, which ended 2016 6.2% below where it started the year, and indeed
among its lowest levels in a decade.
The FAO highlighted a weak finish to 2016 for wheat prices,
which "weakened as a result of larger-than-expected production estimates in
Australia, Canada and Russia, as well as good crop prospects in Argentina".