World food prices continue their fall, pushed by lower dairy and food oil prices

World food prices fell again in July, with significant drops in daily products and oils and fats helping to compensate for a rise in grains and cereals, the largest component in the index, the United Nations Food and Agriculture Organization (FAO) reported Thursday.

The overall FAO Food Price Index fell 1 percent compared to June, the 15th time it has fallen in the last 16 months. The index is 19.4 percent below its level in July 2014.

The downward trend continued despite a 2.0 percent increase in average prices for grains and cereals, the heaviest weighted of the five major food commodity groups that make up the index. Prices were pushed higher by what FAO called "unfavorable" weather in North America and Europe. Rice prices kept the grains and cereals sub index from rising more, with prices falling due to a strong harvest in Asia.

Sugar prices also rose, jumping 2.5 percent due to poor harvesting conditions in Brazil.

But meat prices were stable, and dramatic falls in prices for dairy products and fats and oils were enough to push the overall index lower: dairy prices fell 7.2 percent compared to June due to lower-than-expected import demand in China and strong production levels in the European Union, while prices for oils and fats slipped 5.5 percent to their lowest price in nearly six years. Most of the drop came from strong production of palm oil in Asia and soy oil in South America.

The next installment of the FAO index, which is based on a basket of 55 goods and 73 price quotations in five major food commodity groups, will be released Sept. 10. Endit