The Food and Agriculture Organization's food price index in July hit its lowest point since September 2009, averaging 164.6 points – down 1% from June and 19.4% from July of last year.
The decline reflected sharp drops in the prices of dairy products and vegetable oils, FAO said, which more than offset some increases in the prices of sugar and cereals. Meat prices held steady.
The Cereal Price Index averaged 166.5 points in July, up 3.3 points from June, but still 18.7 points (10.1 percent) below July last year.
For the second consecutive month, strong wheat and maize kept the index up, while rice prices fell. International prices of wheat and major coarse grains surged on poor North American weather during the first half of July, much of which was eroded in the second half as weather prospects improved.
Rice prices remained on a falling trend, reflecting intense exporter competition for markets amid weak import demand.
The Vegetable Oil Price Index averaged 147.6 points in July, nearly 9 points below June and its lowest value since July 2009.
The recent slide was primarily driven by developments in the palm and soy oil markets. Soy oil prices weakened on ample export availabilities in South America and a favorable outlook for global supply in 2015-2016. Continued weakness in crude oil prices also weighed on the vegetable oil complex.
The Dairy Price Index averaged 149.1 points in July, down 11.5 points from June.
Prices for dairy commodities declined across the board, with milk powders being most affected, followed by cheese and butter. Subdued import demand from China, the Middle East and North Africa caused prices to fall.
Additionally, some manufacturers in New Zealand reduced prices in an attempt to trim inventories prior to the closure of the financial year, at the end of July. EU milk production is currently running above its level of a year ago, resulting in good availability of products for export.
The Meat Price Index averaged 174.1 points in July, nearly unchanged from June. International prices of beef moved up, offsetting a decline for pork and lamb, while poultry quotations remained stable.
Prices of beef from Australia, in particular, rose, supported by stronger import demand from the United States, Japan and the Republic of Korea, amongst others. Muted domestic demand for pork in some EU member states caused quotations to fall, with export prices following suit.
The Sugar Price Index averaged 181.2 points in July, up 4.4 point from June 2015.
The increase was largely due to reports of less than ideal harvesting conditions in the main sugar producing region of Brazil.
Also, so far into the season, a large share of the Brazilian sugarcane harvest is reportedly being diverted for the production of ethanol instead of sugar.