World Food Prices Drop to Six-Month Low as Grain Costs Drop

Aug 07, 2014 1:27 pm ET

(Updates with economist comment in third paragraph.)

Aug. 7 (Bloomberg) -- Global food prices fell to a six- month low in July as costs for grain tumbled on prospects for ample harvests, the United Nations said.

An index of 55 food items dropped 2.1 percent to 203.9 points from 208.3 points in June, the UN’s Rome-based Food & Agriculture Organization said in an online report today. The agency’s gauge of grain prices slid 5.5 percent from the previous month to the lowest since August 2010. Vegetable oil prices were pegged at the lowest since July 2010, the FAO said.

“We are approaching the harvest period so the danger of having further setbacks is much less,” Concepcion Calpe, a senior economist at the UN FAO, said by telephone today. “This year we feel we are in a rather comfortable situation.”

Prices for corn, soybeans and wheat on the Chicago Board of Trade, the global benchmark, slid in recent weeks to the lowest levels since 2010 as U.S. crops developed in good condition and outlook improved for harvests in Russia and Ukraine. The U.S. Department of Agriculture may forecast next week that corn and soybean production in the U.S., the top grower, will climb to a record, according to a Bloomberg News survey.

Dairy prices in the FAO’s index declined 4.4 percent from June, falling for a fifth month and “reflecting both reduced import demand and abundant export availability,” the agency said on its website. Sugar prices rose 0.4 percent from the prior month amid uncertainty about production in Brazil.

A gauge of meat costs climbed 1.8 percent to 204.8 points, the highest on records dating to 1990, amid tight cattle supplies in Australia as producers rebuild herds as well as strong demand in Asia, according to the report.