Sharp declines in the prices of grains, oilseeds and dairy pulled down global food prices, which dropped to a six-month low in July 2014, the United Nation's food agency has said.

The Food and Agriculture Organisation's (FAO) food price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 203.9 points in July, down 4.4 points or 2.1% from June 2014.

July's price index figure was 1.7% below July 2013, according to an FAO statement.

Commodity Indices

FAO Food Price Index
FAO Food Price Index. FAO

The FAO Cereal Price Index averaged 185.4 points in July, down 10.7 points or 5.5% from June and was down 36.9 points, or 16.6%, from a year ago.

The Vegetable Oil Price Index averaged 181.1 points in July, down 7.7 points or 4.1% from June. The decline continued to be primarily driven by falling soy and palm oil prices.

The Dairy Price Index averaged 226.1 points in July, down 10.3 points or 4.4% from June and was down 17.5 points, or 7.2%, from a year ago

The Sugar Price Index averaged 259.1 points in July, marginally up 1.1 points or 0.4% from June, and was up 20.2 points, or 8.4%, from a year ago.

However, continued strong demand for meat in Asia, particularly in China, supported the FAO Meat Price Index that averaged 204.8 points in July, 3.7 points or 1.8%, higher than its revised value in June. The index was 25.4 points, or 14.1%, higher from a year ago.

FAO Commodity Indices
Commodity Price Indices. FAO

An import ban imposed by Russia to prevent countries, which have sanctioned Moscow over Ukraine, from selling food there for a year will probably have a limited impact on global food prices, senior FAO economist Abdolreza Abbassian told Reuters.

Senior FAO economist Concepcion Calpe said in the statement: "The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons, especially for cereals and oils, a situation that is expected to facilitate rebuilding of world stocks.

"Livestock product markets have their own dynamics: in the case of meat, beef in particular, many exporting countries are in a herd rebuilding phase, which is limiting availability for exports and sustaining prices," Calpe said.

"As for dairy products, supplies available for trade appear to be abundant, which, along with a faltering import demand, has weighted on July's quotations," she added.