The latest FAO Food Price Index was released yesterday, and is down four points from June and seven points from a year ago. This is the third consecutive monthly drop and is due in large part to lower grain, soy, and oil prices.

The Cereal Price Index dropped in July by 8.8 points, down nearly 33 points from July 2012. This sharp drop was driven mainly by maize prices, which fell on favorable weather and production prospects in several major producers. Wheat prices also declined in July, but that decline was limited by increased export demand.

The Oils/Fats Price Index also declined in July by 7 points, reaching its lowest levels in three years. Large export supplies in South America and the US drove down soy prices, while palm oil prices saw a drop as a result of ample supplies and lower-than-expected demand from China.

The Dairy and Sugar Price Indices also declined slightly in July, while the Meat Price Index remained largely unchanged.

Last month's AMIS Market Monitor saw good news for cereals prices and supplies as well. The report cited an expected increase in global cereal stocks, particularly maize, due to bigger-than-expected harvests.

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