World food prices jumped for the third consecutive month in December 2019, as a strong rally in vegetable oil prices drove the FAO Food Price Index to its highest level in five years. The latest upturn was once again driven by palm oil prices, buoyed by both solid demand, especially from the biodiesel sector, and concerns around tightening supplies.
The FAO Food Price Index averaged 181.7 points during the month, a 2.5 percent increase from November and the highest level since December 2014. For 2019 as a whole, the index averaged 171.5 points, 1.8 percent higher than in 2018 but still 25 percent below its peak in 2011.
The FAO Vegetable Oil Price Index rose 9.4 percent from November, increasing for the sixth consecutive month. There was also a December increase for soy, sunflower and rapeseed oils. However, despite this the vegetable oil sub-index had throughout 2019 reached its lowest annual average since 2007.
The FAO Sugar Price Index increased 4.8 percent from November partly prompted by rising crude oil prices, which encouraged Brazil's sugar mills to use more sugarcane supplies to produce ethanol. This then leads to reduced sugar availability in the global market.
The FAO Dairy Price Index also went up by 3.3 percent during the month, led by cheese prices, which increased by almost 8 percent. This was amid tighter export availabilities from the EU and Oceania.
The FAO Cereal Price Index rose 1.4 percent, driven mainly by wheat prices amid accelerating import demand from China and logistical problems in France due to continued protests in the country and which hit a peak in December 2019. However, maize and rice price quotations remained broadly stable.
The FAO Meat Price Index averaged 191.6 points in December, almost unchanged from its revised November value. The sub-index ended the year 18 percent higher than in December 2018, driven by pig meat quotations both by solid import demand from Asia and pre-festivity internal demand in the EU and Brazil.
