Global food prices fell for a third month in July to their lowest level in a year. The drop was primarily driven by lower international prices for grains, soy and palm oil.

Food prices are forecast to decline further this year owing to higher-than-anticipated agricultural production the world over, the UN's Food and Agriculture Organisation (FAO) said.

Its food price index fell by 2% in July, to 205.9 points compared to 210.1 in June. Sugar, meat and dairy quotations were also down in July.

The FAO's headline index measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar.

"Supplies are proving to be much better than anticipated a few months ago. The weather has been pretty good in many cases and is giving hope for higher production," FAO senior economist Abdolreza Abbassian said.

"There is an extent to which prices could fall," he said. "But I'm not sure we are going to see as much of a decline in coming months as we saw in the past few months."

According to the Rome-based agency, higher-than-expected maize production in the US, Argentina and the Black Sea region will weigh on corn prices in those regions and will pull down prices elsewhere as well.

Food prices could face further downward pressure if the US dollar strengthens, Abbassian said. A stronger dollar weighs on dollar-traded commodities as it makes them more expensive for traders trading with other currencies.

The FAO raised its forecast for global cereal production in July, and predicted a more than 7% increase in output to 2.479 billion tonnes for the 2013-14 financial year. Its next output forecast is due in September.

Food prices surged during the summer of 2012 after drought in the US hit agricultural output. Riots in several countries that year also pushed up prices to levels close to those seen in 2008.

FAO's food price index hit a peak of 238 points in February 2011. High food prices fuelled the Arab Spring uprisings in the Middle East and North Africa that year.