Global oversupply and concerns over China's economic slowdown have knocked food commodity prices to the lowest level in over six years, the United Nations (UN)'s food body said on Thursday.
The Food and Agriculture Organization of the UN's trade-weighted food price index posted its steepest monthly drop in August since December 2008, falling to 155.7 points, its lowest level since April 2009.
"In addition to ample supplies, a number of other factors contributed to the decrease, including the slump in energy prices and concerns about China's economic slowdown and its negative consequences on the global economy and financial markets," the organization said in an statement on Thursday.
The index is a measure of the monthly change in international prices of a basket of five food commodities—cereal, vegetable oil, dairy, meat and sugar. Cereal prices were at their lowest level since June 2010 and the prices of milk powders, cheese and butter "dropped substantially."
Vegetable oil prices hit a March 2009 trough and sugar prices also fell on the previous month, hit by a falling Brazilian real and expectations that India will become a net exporter of the commodity.
The only food commodity that didn't see a fall was the price of meat, which remained virtually unchanged from the previous month.
"International prices of ovine (sheep) meat moved up somewhat, while those for other types of meat were stable," the UN said.
"Nevertheless, compared to the index's historic peak in August 2014, overall prices were down by 18 percent, with pig and ovine meat the most affected, although poultry and bovine meat quotations also slid markedly over the period."
Steady meat prices boost China
Steady meat prices caused some surprise strength in Chinese inflation figures published this Thursday. Consumer price data showed a 2 percent rise in August from a year earlier, with pork prices rising a hearty 19.6 percent. This contrasted with overall producer prices that saw a further slip into deflationary territory.
On Thursday, the UN reported "limited import demand" from China, especially for dairy products, adding to concerns about how growing pains in the world's second largest economy might impact internationally.
Investors and economists are concerned that China, once relied upon as a global engine of growth, could suffer a "hard landing" this year, with annual economic expansion figures failing to match the double-digit readings of the previous decade.
Outside of China, recent data appears to support the UN's bearish stance on food prices.
In the U.K. on Wednesday, the British Retail Consortium reported annual food inflation of 0.2 percent for August, up marginally from the 0.1 percent rise in July. However, the organization's director said the trend was still for prices to fall.
"Annual food prices rose for a second month but once again the rise was marginal...and is likely to be a temporary fluctuation in a longer term downward trend driven by ongoing competition," BRC Director General Helen Dickinson said in a press release.