Global food prices sank to their lowest in almost six years in July, as sharp drops in the value of dairy products and vegetable oils overwhelmed increases in sugar and cereals, the United Nations food agency said on Thursday.
The Rome-based Food and Agriculture Organization's (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 164.6 points in July, down 1.7 points or 1.0 percent from June.
July's reading is the lowest on the index since September 2009 and follows more than a year of almost uninterrupted falls, driven by hefty overall supplies and soft demand, said FAO senior economist Abdolreza Abbassian.
The FAO food price index has been reflective of the fate of wider commodity prices, pummelled by fears of a hard economic landing in China, abundant supply and the prospect of U.S. interest rate rises that have bolstered the dollar.
Many global commodities are priced in dollars, so a stronger U.S. currency makes imports more expensive in other currencies.
In an abrupt start to August, the 19-commodity Thomson Reuters/Core Commodity CRB index .TRJCRB tumbled to its lowest level since 2003.
In July, the dairy price index dropped 7.2 percent from the previous month, mainly due to lower import demand from China, the Middle East and North Africa amid abundant EU milk production which has resulted in good availability of dairy products for export.
The July vegetable oil price index was some 5.5 percent below its June level, reaching its lowest value since July 2009.
Recent slides were primarily caused by a fall in international palm oil prices due to increased production in Southeast Asia combined with slower exports, especially from Malaysia, and a further weakening of soy oil prices on ample supplies for export in South America and a favorable outlook for global supply in 2015/16.
The cereal price index rose by 2.0 percent from June, but was still 10.1 percent below July last year's level.
For the second consecutive month, higher wheat and maize prices, in part due to unfavorable weather in North America and Europe, kept the cereal index rising, but rice prices continued to fall.
In July the meat price index remained nearly unchanged from the previous month. An increase in international prices of bovine meat offset a decline for pig meat and ovine meat, while prices for poultry remained stable.
The sugar price index rose by 2.5 percent from June 2015, largely due to less than ideal harvesting conditions in the main producing region of Brazil.