Futures & Commodities

Food prices fall to 6-year-low as dairy slumps

Anmar Frangoul | Special to CNBC.com

Food prices have hit their lowest level since September 2009, dragged down by high supplies of milk in Europe and soy and palm oil in South East Asia and South America respectively.

A sharp fall in prices for vegetable oils and dairy products saw the Food and Agriculture Organization of the United Nations (UN)'s food price index fall to 164.6 points last month—one percent lower than in June and 19.4 percent lower than last year.

Charly Triballeau | AFP | Getty Images

The index, which is trade-weighted, follows international market prices for cereals, dairy, sugar, vegetable oils and meat and was published on Thursday.

While meat prices for July were almost unchanged from June, the UN reported that dairy prices fell by 7.2 percent. Vegetable oil prices fell 5.5 percent from June, to their lowest value since July 2009, according to the UN.

Lower dairy prices were mainly due to "lower import demand from China, the Middle East and North Africa, amid abundant EU (European Union) milk production," the UN said.

Vegetable oil prices fell due to a range of factors, including increased production in South East Asia amid slower exports and "a further weakening of soy oil prices on ample supplies for export in South America and a favorable outlook for global supply in 2015/16."

Soft commodities—those that are grown rather than mined—have been hit by the global slump in commodity prices.

Soy bean prices have declined 13 percent over the last 12 months, according to data from Reuters, while wheat has fallen by 19 percent. Corn is down by 8 percent over the last year.