Food prices fall on bumper grain crop

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Food prices fall on bumper grain crop

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Food prices have fallen, thanks in part to abundant grain supplies from a hefty harvest.

They hit their lowest level in more than a year in July and the United Nations’ food agency has said that trend would continue, thought not so dramatically.

It expects global cereal production to be up more than seven percent from last year’s drought hit harvest.

Wheat prices are at a one year low, the same for soya beans – which are often used for livestock feed – while corn is down 40 percent from the highs of one year ago.

Food prices surged last summer due to a historic drought in the United States. Before that in early 2011 they hit an all-time high, leading to riots in poorer countries and helping fuel the Arab Spring uprisings in the Middle East and North Africa.

The UN’s Food and Agriculture Organisation’s food price index, which measures monthly changes cereals, oilseeds, dairy, meat and sugar, fell nearly two percent in July, declining for the third month running.

The fall was driven mainly by lower prices for grains, soy and palm oil, but sugar, meat and dairy costs also fell.

The FAO believes food prices could face further downward pressure if the US dollar strengthens as commodities like cereals are bought and sold in dollars.