FAO rice farming
Farmers beat rice to release grains near the village of Kamangu, Democratic Republic of Congo.
Photo courtesy of FAO.
ROME, ITALY — Prices of major food commodities declined for the fifth year in a row in 2016, averaging 161.6 points for the year as a whole, approximately 1.5% below their 2015 levels. Bumper harvests and prospects for staple cereals offset upward pressure on the Food and Agriculture Organization of the United Nations (FAO) Food Price Indexfrom tropical commodities such as sugar and palm oil, where production was affected by El Niño.

In December, the Index averaged nearly 172 points, unchanged from November.

The FAO Food Price Index is a trade-weighted index tracking international market prices for five key food commodity groups: major cereals, vegetable oils, dairy, meat and sugar.

During 2016, cereal prices experienced a steady decline, falling 9.6% from 2015 and dropping 39% from their 2011 peak. At the same time, sugar and vegetable oil prices rose over the year by 34.2% and 11.4%, respectively.

"Economic uncertainties, including movements in exchange rates, are likely to influence food markets even more so this year," said Abdolreza Abbassian, FAO senior economist.

FAO's Cereal Price Index, largely stable since September, increased 0.5% in the month of December, with rice and maize quotations firming up while larger-than-expected production estimates in Australia, Canada and Russia led to lower wheat prices.

FAO's Vegetable Oil Price Index rose 4.2% from November, capping a double-digit annual gain to reach its highest level since July 2014. Both palm oil and soy oil quotations rose, the former due to low global inventory levels and tight supplies, the latter on the prospect of rising use in the biodiesel sectors in North and South America.