World food prices fell to their lowest level in six months during July, according to the United Nations Food and Agricultural Organisation (FAO) food price index.

Using the years 2002-04 as the comparison level (set at 100 points), the index measures the monthly change in international prices of a basket of food commodities.

The food price index averaged 203.9 points in July this year – down 4.4 points (2.1%) from a revised value in June and 3.5 points (1.7%) below July last year.

Cereal, oilseed, and dairy prices all fell, while meat prices rose for the fifth consecutive month.

More detail on each food category

Cereals

The anticipation of bumper wheat and maize crops in many of the world’s biggest producing states, including the US, Russia and many EU countries, led to a sharp fall in cereal prices, taking the cereal price index 5.5% lower from June to July to 185.4 points.

This was 16.6%, or 36.9 points below July 2013. The international price of maize alone fell by 9.2% from June to July this year, while wheat prices dropped by 5.8%.

Dairy

Reduced import demand in a number of areas combined with abundant export availability to create a slide in international dairy prices. The FAO dairy price index fell 10.3 points – 4.4% between June and July to 226.1 points.

This was 7.2% or 17.5 points lower than July last year. Prices are continuing to fall due to increased export supplies in the EU alongside a favourable start to the season in Asia.

Butter purchases declined in Islamic countries during Ramadan and Russia, while demand for whole milk powder dropped in China, the world’s largest importer.

Meat

Other than sugar, meat was the only sector measured by the FAO food price index to see an increase in price. The index includes beef, sheep meat, pork, poultry.

In July, international meat prices increased 3.7 points or 1.8% to 204.8 points above its revised June value, and 14.1% or 25.4 points above July last year.

A strong rise in bovine meat prices in Australia, where herd rebuilding has reduced export supplies, led the international increase in prices. Prices were also bolstered by strong import demand from Asia – and China in particular.

In the poultry and sheepmeat sectors, average quotations also rose, while those for pig meat fell back from June’s all-time high.

Vegetable oils

International vegetable oil prices (including rapeseed, sunflower, palm oil and soy) experienced their fourth consecutive monthly decline – falling 4.1% in July, or 7.7 point to an average 181.1 points.

The fall was primarily driven by slow global import demand for palm oil and record soy crop prospects in the US with large availability in South America.

Rapeseed and sunflower oil prices also weakened due to ample crop prospects for 2014-15.


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