The UN Food and Agriculture Organisation announced on Thursday that food prices had continued to ease across the world in July; prices were down across almost all categories as rises caused by turmoil in the dairy industry in spring recede into the distance.

FAO monitoring through the Food Price Index, which measures the price of a range of staple foodstuffs around the world, showed average food prices were down by 2 percent on the month in July, and 3.3 percent lower than in July 2012.

The decline in July, which marked the third consecutive monthly drop, was largely driven by lower international prices for grains, soy and palm oil. Quotations for sugar, meat and dairy, which had remained relatively level in previous months, also began to slip.   

The Cereal Price Index fell 3.7 percent from June. FAO said the decline was driven by falling maize prices, as favourable weather appears to have confirmed estimates of significant production increases in several leading maize producing countries. Linked to maize, wheat prices also fell, but the strong pace of exports limited the decline.

Cereal prices in July were 13 percent lower than the previous year, when fears over the US drought, along with drought in other breadbasket regions, sparked grain market rallies which caused maize and wheat prices to reach record highs.

Oil and fats prices fell 3.3 percent from June to their lowest level in three years. Higher production and more export availability, combined with weaker demand, for key oils have led prices to abate. The prospect of a healthy soybean crop in the United States also helped relax prices. FAO added that prices for rapeseed and sunflower oil also fell, reflecting improved 2013/14 crop prospects.

Dairy prices, too, were down 1.1 percent, falling at a slower rate than in the past two months, but continuing the downward trend seen since prices spiked in April. The slower decline was a result of tightening availabilities in Oceania and stagnating milk production amongst other exporters, principally in Europe, South America and the United States.

Overall, meat prices were unchanged; pig and poultry prices were slightly lower, but sheep and cattle meat both increased in price. After a long, level period, FAO said "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." 

Sugar prices fell 1.5 percent on the month, on the back of expected surpluses from South American producers, principally Brazil.