Positive outlooks for cereal crops have led food prices lower for the third consecutive month.

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The UN Food and Agriculture Organisation's Food Price Index eased for a third consecutive month in June, a decline mostly influenced by lower wheat, maize and palm oil prices, reflecting ample supplies and improvements to production prospects this year.

The Food Price Index, based on the prices of a basket of internationally-traded food commodities, was down 31.8 percent from May levels and almost 2.8 percent lower than in June 2013.

The improving situation in many countries also led to further upward revisions to coarse grains and wheat supply forecasts for 2014/15 in the latest FAO Crop Prospects and Food Situation report.

FAO's latest forecast for world cereal production in 2014 now stands at 2,498 million tonnes, 18 million tonnes up from the previous figure in June, although still 1 percent (23 million tonnes) below last year's record output. The projected increase is largely on the back of better prospects in the United States, the EU and India.

However, the quarterly report also warned that many people in conflict and drought stricken areas face food insecurity, despite increased supplies and lower average prices. FAO estimates that globally 33 countries, including 26 in Africa are in need of external assistance due to a combination of conflict, crop failures and high domestic food prices.

Food Price Index

The food Price Index had risen to a ten-month high in March 2014, but fell in April, May and June, mainly as a result of lower cereal, vegetable oil and dairy prices. Sugar prices also declined in June from May, but remained up from last year, while in contrast, meat prices on average increased from May.

The June Cereal Price Index was down 5.2 percent from May and 15.6 percent lower on the year. The slide was mainly caused by lower wheat and maize prices, both of which fell by close to 7 percent amid further improved crop prospects and diminishing concerns over possible disruption of shipments from Ukraine.

Dairy prices were down 1.0 percent over May, suggesting declines seen in recent months are slowing. Meat prices, on the other hand, were up by 0.7 percent, on higher demand and "constrained supply."