The Rome-based agency said its Food Price Index averaged 205.9 points in July, which is 4 points below June and 7 points lower than in July 2012. The Index measures monthly changes in international prices of a basket of meat, dairy, cereals, oils and fats, and sugar.

The FAO Cereal Price Index averaged 227.7 points in July, down 8.8 points from June and as much as 33 points below July last year. “The sharp decline mostly reflected falling maize prices as favourable weather boosted hopes of a significant production increase in several leading maize-producing countries,” said the agency.

Wheat prices also fell but the strong pace of exports limited the decline. Rice price changes varied according to origins, with a decrease in Thai prices contrasting with higher Vietnamese quotations.

The FAO Oils/Fats Price Index averaged 191 points in July, down by 7 points from June and the lowest level in three years. Meanwhile, while dairy prices fell overall – 2.6 per cent from June – the decline was by a smaller margin than in the previous two months as a result of tightening availabilities in Oceania and stagnating milk production amongst other exporters, principally in Europe, South America and the United States.

Meat prices, FAO noted, were more or less unchanged from the revised June level. Prices for poultry and pig meat were lower, while those of bovine and ovine meat rose.

In addition, sugar prices declined for the fourth consecutive month in July, on the back of anticipated large surplus production in major producing areas, notably in Brazil, the world’s largest sugar producer and exporter.

Declining ethanol prices in Brazil also provided an incentive to convert more sugarcane into sugar instead of ethanol, which put additional downward pressure on international sugar prices, FAO stated.

In a news release, the UN Food and Agriculture Organization (FAO) said its most recent Food Price Index dropped 1.1 per cent from November. The decline from 213 to 209 points was largely due to the continuing decrease in the international prices of cereals, oils and fats.

The Index measures the monthly change in international prices of a basket of 55 food commodities, including meat, dairy, sugar, and cereals. The prices for cereals also increased slightly, while sugar and oils prices fell.

“The result marks a reversal from the situation last July, when sharply rising prices prompted fears of a new food crisis,” said the Assistant Director-General in charge of FAO’s Economic and Social Development Department, Jomo Sundaram.

“But international coordination, including through the Agricultural Market Information System (AMIS), as well as flagging demand in a stagnant international economy, helped ensure the price spike was short-lived and calmed markets so that 2012 prices ended up below the previous year’s levels,” he added.

According to its website, the AMIS initiative – for which the Secretariat is based at FAO Headquarters in Rome, Italy – seeks to enhance food market transparency and encourage coordination of policy action in response to market uncertainty, mainly focusing on four foods that are particularly important in international markets: wheat, maize, rice and soybeans.

As a whole, the Index averaged 212 points in 2012, seven per cent less than in 2011. The sharpest falls in prices were registered in sugars, dairy products and oils, and to a lesser extent in cereals and meat.

From July to September, cereal prices had steadily increased due to uncertainties and tight supplies. However, they began dropping in October because of weaker demand for supplies in industrial uses.

In December, maize prices fell sharply as large export supplies in South America relieved market pressure. Rice prices also dipped last month due to the expectations of good harvests, but wheat values remained virtually unchanged.

Oils and fats prices experienced a 1.9 per cent drop mainly due to the continued build up of large global inventories of palm oil, and sugar prices decreased only marginally. FAO noted that an increase in global sugar production, especially in Brazil, kept international prices down for much of the second half of 2012.

Meat prices registered a slight decrease as pig prices fell by 2 per cent, the agency stated, while dairy prices rose by 0.9 per cent – they were the only commodities to have experienced a rise in price as the dairy market is increasingly susceptible to supply changes related to pasture conditions, feed availability and affordability.

The Food and Agriculture Organization’s (FAO) monthly Food Price Index rose six per cent in July, mostly driven by a surge in grain and sugar prices, and averaged 213 points, up 12 points from June.

The index measures the monthly change in international prices of a basket of 55 food commodities, including meat, dairy, sugar, and cereals.

According to FAO, the severe deterioration of maize crop prospects in the United States, following extensive drought damage, pushed up maize prices by almost 23 per cent in July.

International wheat quotations also increased, experiencing a 19 per cent surge due to low expectations of production in Russia, coupled with the prospects of high demand for wheat because of tight maize supplies. However, international prices for rice remained mostly unchanged.

Untimely rains in Brazil – the world’s largest sugar exporter – largely caused the price of sugar to increase by 12 per cent, and concerns over India’s delayed monsoon and poor rains in Australia also contributed to the rebound in price.

In contrast, the prices for meat and dairy products experienced little change. Average meat prices decreased by 1.7 per cent in July, falling for the third consecutive month, while average dairy prices remained unchanged from June, after five straight months of decline.