The UN Food and Agriculture Organisation's Food Price Index decreased for a fourth consecutive month in July mainly due to a sharp decline in international prices for maize, wheat and certain oilseeds,  reflecting ample supplies for these commodities.

Based on the prices of a basket of internationally-traded food commodities, the FAO Food Price Index fell 2.1 percent compared to June, and was 1.7 percent below its July 2013 level. The fall comes in spite of renewed tensions in the Black Sea region and weather worries in China and the United States, where drought is affecting major agricultural regions.

"The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons, especially for cereals and oils, a situation that is expected to facilitate  rebuilding of world stocks," said FAO senior economist  Concepción Calpe.

In contrast to the general trend, meat prices rose for the fifth consecutive month in July, and those for sugar remained firm.  Still, the fall in quotations for grains, oilseeds, as well as dairy products pushed down the FAO Food Price Index to its lowest level since January 2014.

"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,"  Calpe said. "As for dairy products, supplies available for trade appear to be abundant, which, along with a faltering import demand, has weighted on July's quotations," she added.

Sharp slide in cereal and oilseed prices

The July Cereal Price Index was down 5.5 percent from June and as much as 16.6 percent lower on the year.  Falling maize prices (down 9.2 percent from June) led the index lower, though wheat prices were also down 5.8 percent. Although some concerns still persist, the fall reflects excellent production prospects worldwide, according to FAO, as well as expected abundant exportable supplies in the 2014/15 marketing season.

Vegetable oil prices were down 4.1 percent from June. The decline continues a trend set in past months, which has primarily been driven by falling soy and palm oil prices.

Soy oil values fell mainly in response to record crop prospects for the United States as well as abundant supply in South America while palm oil quotations eased on persisting strength in Malaysia's currency and slow global import demand. Prices for rapeseed and sunflower oil also weakened, reflecting ample crop prospects for 2014/15.

Dairy prices fell by 4.4 percent last month and were 7.2 percent lower than in July 2013, reflecting reduced import demand - including a decline in purchases of butter by Islamic countries during Ramadan - contributed to the downward trend in dairy prices.

Meat prices rise while sugar remains volatile

Meat prices gained 1.8 percent, ending up 14.1 percent higher than last year’s levels. Average prices for poultry and ovine meat also rose, while those for pig meat fell back somewhat from the all-time high registered in June.

Sugar prices edged up marginally (0.4 percent). FAO warned that prices remain volatile, amid uncertainty over the impact of drought on sugarcane in Brazil, the world's largest producer and exporter. Below average monsoon rains in India, the second largest world sugar producer, have also taken a toll. Sugar prices were 8.4 percent higher than in July 2013.