A third consecutive fall in global food prices during the month of July was largely driven by lower international prices for grains, soy and palm oil, according to the United Nations Food and Agriculture Organization (FAO).
The UN agency's Food Price Index averaged 205.9 points in July 201, a fall of around 2% on June 2013 and 3.3% lower than the same period last year.
The data suggests that the fall in prices has been primarily driven by lower prices for grains, soy and palm oil, but added that sugar, meat and dairy quotations were also down from June 2013.
Oils and fats
The FAO revealed that the prices of oils and fats had dropped by an average of 7 points (3.3%) in the month of July - falling to the lowest level in three years on the back of easing quotations for both soy and palm oil.
Falls in palm oil price were ascribed to a combination of ample production and lower than expected import demand, most notably by China, said the FAO. While the UN agency noted that soy oil values have fallen in response to ample export availabilities, especially in Argentina, combined with weak demand (including from the biodiesel sector), as well as good soybean crop prospects in the United States.
Prices for rape and sunflower seed oil also fell.
Gains in grains
The Cereal Price Index average for July dropped by 3.7% from - and was reported to be down as much as 13% on 2012 values. The FAO said this sharp decline mostly reflected falling maize prices as favourable weather boosted hopes of a significant production increase in several leading maize producing countries.
Wheat prices also fell but the strong pace of exports limited the decline, while rice price changes varied according to origins, with a decrease in Thai prices contrasting with higher Vietnamese quotations.
Dairy, sugar and meat
The FAO report also noted smaller drops for prices in dairy (1.1% fall for the month) and sugar (1.5% drop), while prices for meat remained 'more or less unchanged' from June values. It said that sugar prices fell for the fourth consecutive month on the back of anticipated large surplus production in major producing areas, notably the world’s largest sugar producer and exporter Brazil.
In the meat sector, the UN agency said that prices for poultry and pig meat were lower, while those of bovine and ovine meat rose. Overall, there are signs that international prices for meat are weakening in the face of reduced import demand – especially from Asian countries – reflecting production growth and, in some cases, a build-up of domestically produced meat inventories, said the FAO.