Global Food Markets End 2025 on Volatile, Divergent Note
Cereals Dip While Oils and Dairy Lift 2025 Annual Index
Rome: World food commodity prices closed the year 2025 on a slightly weaker footing, even as annual averages pointed to a notable rise. According to the Food and Agriculture Organization of the United Nations (FAO), the FAO Food Price Index (FFPI), which tracks international prices of globally traded food commodities, averaged 124.3 points in December, down 0.6 per cent from November and 2.3 per cent below December 2024.
The December decline came as dairy products, meat, and vegetable oil prices fell, offsetting modest increases in cereal and sugar quotations. By contrast, for the full year, the FFPI averaged 127.2 points, up 4.3 per cent compared to 2024, reflecting broader upward pressures from vegetable oils and dairy products, which outweighed declines in cereals and sugar. Notably, December 2025’s index still stood 22.4 per cent below the peak in March 2022, underscoring the lingering effects of the global commodity surges during the early post-pandemic recovery period.
Cereals: Monthly Rise Amid Annual Decline
The FAO Cereal Price Index averaged 107.3 points in December, up 1.7–1.8 per cent from November, buoyed by renewed concerns over Black Sea wheat export flows, ongoing robust maize import demand, and strong domestic ethanol production in both Brazil and the United States of America. Rice markets also contributed to the monthly increase, with the FAO All Rice Price Index rising 4.3 per cent on reduced harvest pressure, improved demand, and supportive policy interventions.
Yet, for the year as a whole, cereal prices fell. The annual Cereal Price Index averaged 107.9 points in 2025, down 4.9 per cent from 2024, marking its third consecutive annual decline and the lowest annual average since 2020. The FAO All Rice Price Index averaged 103.5 points in 2025, 35.2 per cent below 2024, reflecting ample exportable supplies, intense competition among exporters, and reduced purchases by some Asian importing countries. Large crops in Argentina and Australia also reinforced downward price pressure.
Vegetable Oils: Steady Monthly Dip, Three-Year Annual High
FAO’s Vegetable Oil Price Index fell 0.2 per cent in December to 164.6 points, marking a six-month low. Prices of soy, rapeseed, and sunflower oils declined on abundant export supplies and higher production in Australia and Canada, while palm oil edged up slightly due to expected seasonal production slowdowns in Southeast Asia.
Despite the December dip, the annual index averaged 161.6 points for 2025, up 17.1 per cent from 2024, marking a three-year high amid global supply tightness. The divergence between short-term monthly softness and sustained annual strength highlights the continued sensitivity of vegetable oil markets to both production and trade shifts.
Meat: Regional Nuances Drive Mixed Outcomes
The FAO Meat Price Index averaged 123.6 points in December, down 1.3 per cent from November but 3.4 per cent above December 2024. Prices fell across all meat categories, with bovine and poultry meats declining the most. Seasonal dry conditions in Australia led to herd destocking, increasing cattle availability and pressuring bovine prices. In Europe, pig prices fell amid weaker global demand, while ovine meat eased only slightly despite strong import interest. Poultry prices declined globally due to ample exportable supplies.
For the year, the FAO Meat Price Index averaged 123.2 points, up 5.1 per cent from 2024, supported by robust import demand and heightened market uncertainty tied to animal disease outbreaks and geopolitical tensions. FAO notes that for recent months, the meat index relies on projected as well as observed prices, and revisions can influence the FFPI value.
Dairy: Seasonal Dynamics and Strong Annual Gain
The FAO Dairy Price Index declined 4.4 per cent in December, led by a sharp drop in butter prices caused by higher seasonal cream availability in Europe. Whole milk powder prices fell in line with peak milk output in Oceania and subdued buying interest. Skim milk powder and cheese saw more moderate declines.
Nonetheless, for 2025, the dairy index averaged 146.9 points, 13.2 per cent above 2024, reflecting strong global demand and limited exportable supplies earlier in the year. Cheese, butter, and whole milk powder drove most of the annual gain, while skim milk powder rose only marginally due to plentiful availability.
Sugar: Seasonal Disruption Drives Short-Term Rise
The FAO Sugar Price Index rebounded 2.4 per cent in December to 90.7 points after three consecutive monthly declines, primarily due to reduced sugarcane crushing in Brazil’s southern regions. Despite this, the annual index averaged 104.3 points, 17 per cent below 2024, marking the lowest annual value since 2020. Abundant global supplies, especially from India, helped contain upward pressures.
####Global Context and Methodology Notes
The FFPI is calculated as the weighted average of five commodity group indices — cereals, vegetable oils, meat, dairy, and sugar — using export shares from 2014–2016. FAO revised the base period and expanded price coverage in 2020. While most commodity indices rely on observed monthly prices, the meat index often incorporates projections, especially for the most recent months. This can lead to revisions that influence the overall FFPI.
Looking Ahead: Balancing Monthly Volatility and Annual Trends
December’s modest declines do not obscure the broader upward trend for 2025, driven primarily by vegetable oils and dairy products. Cereal and sugar markets, by contrast, experienced downward pressure from large harvests and competitive export markets. Regional production patterns, ethanol demand, animal disease concerns, and trade flows — especially from the Black Sea — remain critical in shaping near-term commodity dynamics.
FAO emphasises that monitoring these patterns is crucial for food security, trade planning, and policy responses. For countries reliant on imports, short-term monthly fluctuations matter for budgeting, while long-term annual trends shape strategic food security planning.
In sum, the December FFPI reflects a complex mosaic of rising and falling prices across different food groups, highlighting the interconnectedness of global markets. While annual averages point to a 4.3 per cent increase from 2024, monthly readings underscore the volatile, often countervailing forces at play, from regional production cycles to geopolitical and supply-chain shocks.
FAO’s comprehensive monitoring of cereals, vegetable oils, meat, dairy, and sugar continues to provide policymakers, traders, and analysts with essential insights into the global food price landscape, helping balance short-term responsiveness with long-term planning.
– global bihari bureau
