Modric is seen as the frontrunner for the award in what is expected to be the first year since 2007 that either Lionel Messi or Cristiano Ronaldo will not claim the prize.
The Real Madrid midfielder played a key role in their third successive UEFA Champions League triumph and starred as Croatia reached the final of the World Cup, where it was beaten 4-2 by France.
His exploits saw Modric win the FIFA Best Men's Player award, but Paris Saint-Germain and Uruguay striker Cavani believes Madrid defender Raphael Varane, Atletico Madrid's Antoine Griezmann and his PSG team-mate Kylian Mbappe are all more deserving of the Ballon d'Or after inspiring Les Bleus to glory in Russia.
"Varane may well be there, Griezmann, Mbappe... I think a Frenchman should win, there are other players who could, but it should be a Frenchman, they have won the World Cup," Cavani said.
"Modric has had a great season, but his team-mate Varane won the Champions League and the World Cup, Modric was a finalist and had a great campaign, but Varane deserves it more."