The FAO Food Price Index declined in January for the fifth consecutive month, reflecting easing international prices across key food commodities, with dairy emerging as the largest drag amid abundant global availability. According to the Food and Agriculture Organisation of the United Nations (FAO), the index averaged 123.9 points in January, down 0.4 percent month-on-month and 0.6 percent year-on-year, signalling a period of relative price stability in global food markets.
Dairy Prices Lead The Downturn
The FAO Dairy Price Index fell sharply by 5.0 percent from December, driven primarily by lower international quotations for cheese and butter. FAO attributed the decline to ample export availabilities, particularly from major producing regions, which outweighed seasonal demand. In contrast, skim milk powder prices firmed, supported by renewed import demand from the Near East, North Africa and parts of Asia, highlighting divergent trends within the dairy complex.
For dairy exporters, the data point to a market characterised by oversupply in fat-based products, while protein ingredients continue to find selective demand in emerging and deficit regions.
Broader Commodity Signals
The downturn in dairy prices coincided with softer prices for meat and sugar, while vegetable oils bucked the trend, rising on supply tightness and biofuel-driven demand.
- The Meat Price Index declined 0.4 percent, led by lower pig meat prices amid ample global supplies
- The Sugar Price Index fell 1.0 percent on expectations of higher output, notably from India and Thailand
- Vegetable oil prices rose 2.1 percent, driven by palm, soy and sunflower oil markets
Cereal prices remained broadly stable, though rice prices rose on stronger demand for fragrant varieties.
Record Harvests Reinforce Supply Comfort
FAO’s updated forecasts for global cereal production in 2025 point to a record 3 023 million tonnes, supported by higher wheat yields in Argentina, Canada and the European Union, alongside expanded maize plantings in China and the United States. Global rice production is also expected to rise, led by gains in India, Bangladesh, Brazil, China and Indonesia. Based on revised supply-demand balances, global cereal stocks are forecast to expand by 7.8 percent, pushing the stocks-to-use ratio to 31.8 percent, its highest level since 2001. This abundance is expected to underpin continued price stability across food commodities.
Implications For Dairy Markets
For the global dairy sector, the FAO data underline a market phase dominated by supply-side comfort rather than demand stress. While this offers relief to food-importing nations, it may pressure farmgate prices in exporting countries, particularly where production costs remain elevated.
FAO cautioned that current stability reflects a favourable alignment of strong harvests, functional supply chains and fertiliser availability, warning against complacency as global food markets remain structurally vulnerable to climatic, geopolitical and policy shocks.
