Dairy Prices Lead to Decline in FAO Food Price Index to 2025 Low
The FAO Food Price Index fell to 124.3 points in December 2025, down from 125.1 points in November, driven by a significant decrease in dairy prices. This marks the fourth consecutive monthly drop, according to the United Nations' Food and Agriculture Organization (FAO).
FAO analysts noted that dairy prices were the primary factor behind the decline, with the Dairy Price Index falling by 4.4% due to a substantial drop in international butter prices. The increased availability of cream in Europe contributed to this trend, easing supply constraints that had previously supported higher prices earlier in the year.
Despite the December decline, dairy prices for 2025 averaged 13.2% higher than in 2024, reflecting strong import demand in key markets and limited exportable supplies during the first half of the year. FAO economists highlighted that tight inventories and weather-related production challenges affected global dairy markets in 2025.
Other food categories also influenced the index's downward trend. The FAO Meat Price Index declined by 1.3% in December, led by lower prices for bovine and poultry meat. Meanwhile, the Vegetable Oil Price Index fell slightly by 0.2%, influenced by weaker quotations for soybean, rapeseed, and sunflower oils, despite gains in palm oil.
Conversely, cereal prices rose by 1.7% in December due to renewed concerns over export flows from the Black Sea region, a key supplier of wheat. Maize prices were also supported by strong demand for ethanol production in Brazil and the United States. However, the Cereal Price Index averaged 4.9% below 2024 levels for the entire year.
Sugar prices increased by 2.4% in December after three months of declines, mainly due to lower production prospects in Brazil's southern regions. Nonetheless, the Sugar Price Index recorded a sharp annual drop, reaching a five-year low in 2025.
