UNITED NATIONS: World food prices fell for a fourth consecutive month in July, with a sharp decline for grains, oilseeds and dairy products outweighing strong meat and sugar prices, the United Nations agriculture agency reported on Thursday.

The UN Food and Agriculture Organisation’s (FAO) Food Price Index, which measures the monthly change in international prices of a basket of 55 food commodities, averaged 203.9 points in July, down 4.4 points, or 2.1 per cent, from June.

“The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons,” said FAO senior economist Concepción Calpe.

The FAO Cereal Price Index averaged 185.4 points in July, down 10.7 points (5.5pc) from June, and as much as 36.9 points (16.6pc) below the level one year ago.

Lower grain prices “reflected excellent production prospects as well as expected abundant exportable supplies in the 2014-15 marketing season,” according to the FAO.

Also read: Slipping food exports

By contrast, rice prices edged marginally higher on renewed import demand, especially given the drought and subsidy lapse in Thai production.

The FAO Vegetable Oil Price Index averaged 181.1 points during the month, down 7.7 points (4.1pc) from June. The decline continued to be primarily driven by falling soy and palm oil prices, due mainly to abundant supplies from the United States and South America.

Prices of dairy also fell, albeit temporarily. The FAO attributed reduced import demand, including a decline in purchases of butter, by Islamic countries during the holy month of Ramazan.

The FAO Dairy Price Index averaged 226.1 points in July, down 10.3 points (4.4pc) over the previous month, and 17.5 points (7.2pc) over the same month last year. Meanwhile, meat prices rose for the fifth consecutive month, and those for sugar remained firm.

“Livestock product markets have their own dynamics: in the case of meat, beef in particular, many exporting countries are in a herd rebuilding phase, which is limiting availability for exports and sustaining prices,” said Mr Calpe.

A continued strong demand for meat in Asia, and particularly China, helped to edge up the FAO Meat Price Index which averaged 204.8 points in July, 3.7 points (1.8pc) higher than its revised value in June and 25.4 points (14.1pc) above the same period last year.

International sugar prices, which have been relatively volatile over the last three months as the world’s largest producer, Brazil, grabbles with a drought, and the second largest producer, India, is expected to experience below average monsoon rains.

These factors contributed to a marginal change of 1.1 points (0.4pc) in the FAO Sugar Price Index, averaging 259.1 points in July. The figure is 20.2 points (8.4pc) higher than in July 2013.

Published in Dawn, August 8th , 2014