PARIS: World food prices fell for a third month in June as the cost of grains and vegetable oils slumped amid expectations for rising supply, the United Nations’ Food & Agriculture Organization said.
An index of 55 food items dropped 1.8 percent to 206 points from a restated 209.8 points in May, the Rome-based United Nations agency wrote in an online report Thursday. World food prices are down 2.8 percent from a year earlier.
Corn futures fell 8.7 percent last month in Chicago amid an outlook for record production in the U.S., the biggest grower. Wheat futures fell 7.9 percent as production in Europe is expected to climb.
“Last month’s decline, which was the third in succession, was largely the result of a marked drop in cereal and vegetable oil prices, following further improvements in global production prospects,” the FAO wrote.
In a separate report, the U.N. agency raised its outlook for 2014-15 harvests of wheat, rice and coarse grains such as corn and barley. Global grain output is forecast to be 2.5 billion metric tons, 18.3 million tons more than predicted last month, the FAO said.
An FAO index of grain prices fell to 196.2 points from 207 in May, the biggest slide since August last year and down from 232.3 points in the year-earlier month. The gauge for vegetable oil prices declined to 188.9 points from 195.3.
For grains, “the slide was mainly caused by a weakening of wheat and maize quotations,” the FAO wrote, using another name for corn. “By contract, rice prices were marginally up from May, mostly reflecting the suspension of large public stock sales in Thailand.”
Dairy prices fell for a fourth month from their February record amid rising production in New Zealand and Europe. A large supply of milk powder is weighing on the market, while “firm” import demand caused cheese prices to climb, the FAO said.
“The decline in June was substantially less than in the previous three months, suggesting that the downward price adjustment may be coming to an end,” the agency said.
The FAO raised its outlook for world wheat output in the 2014-15 season by 4.5 million tons to 707.2 million tons, down from 716.9 million tons estimated for 2013-14. The forecast for coarse grains was increased to 1.29 billion tons from last month’s estimate of 1.27 billion and down from 1.31 million tons a year earlier.
The index of world sugar prices fell to 258 points from 259.3 points. An index of meat prices rose for a fourth month, advancing to 194.2 from 192.8, mainly due to higher pork prices from a U.S. outbreak of Porcine Epidemic Diarrhea virus.