Bumper harvests and prospects for staple cereals offset upward pressure on FAO's Food Price Index from tropical commodities such as sugar and palm oil, where production was impacted by El Nino.

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.

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

Cereals steady in December as dairy and vegetable oils rise

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

FAO's Vegetable Oil Price Index rose 4.2 per cent from November, capping a double-digit annual gain to reach its highest level since July 2014. The FAO Sugar Price Index, while up almost a third over the year, declined 8.6 per cent in the last month of 2016.

The FAO Dairy Price Index also rose, by 3.3 per cent, from November, due primarily to higher prices for butter, cheese and whole milk powder and restrained output in the European Union and Oceania.

The FAO Meat Price Index declined 1.1 per cent from its revised November level. Its average value in 2016 was 7 per cent below that of 2015, due mainly to falls in the international prices of bovine and poultry meats.