Dropping for a third consecutive month, the FAO Food Price Index averaged 209 points during December and on the whole edged down by another 1.1 percent as the year drew to a close. CY12 on the whole saw the index average 212 points, a significant 7 percent year-on-year decline as prices for sugar, dairy and oil saw sharp skids throughout the year.
On the one hand, while global food price dynamic has been easing down steadily over the year, regional food insecurity and hunger continues to riddle the world, proving that today, these issues are largely an issue of food accessibility rather than mere availability.
The trend in prices for major food items at the close of the year show a marked reversal from the situation in July which had commentators voice their fears of an imminent food crisis on the horizon. However, an effort to coordinate international prices and keep local stockpiling in check saw the spiking prices gain some calm as the year wore on. Additionally, demand remained on the lower side in a market that was overshadowed by a largely stagnant international economy.
The FAO Oils/Fats Price Index averaged 197 points in December, down 1.9 percent, from November, and was the fourth consecutive monthly fall for edible oil prices which have gone down as a result of a large stockpile of global palm oil inventories.
Additionally, the average value of the Dairy index during the year also saw a sharp decline as the market remained largely susceptible to supply side fluctuations based on global pasture conditions and feed availability.
Meanwhile the FAO Cereal Price Index averaged 250 points in December, down 6 points from November. Throughout the year the index averaged 241 points, some 2.4 percent below the average during 2011, despite surging midway through the year due to tightening supplies and uncertainties in yield estimates from large cereal producing countries of the world.
However cereal export prices eventually calmed down as the year saw demand weaken from second tier consumers including feed and industrial users. Additionally, maize prices were another factor weighing heavily on cereals. December saw maize prices witness steep falls as South American supplies eased off the market pressure.
On the whole, while 2012 remained an year of subdued prices, the new year may bring a rude awakening. Coming off the back of incessant speculation, food prices might climb high this year as millions are made off the ""soft commodity" market by financiers who are blamed by many to be the biggest forces behind price hikes in a market despite the presence of sizable physical inventories of some commodities.
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