September 10, 2015 / 8:17 AM / 5 years ago

World food prices fall sharply in August, extending slide

ROME (Reuters) - World food prices fell sharply in August, dragged down by ample supplies and external factors including a slump in energy prices and concerns about an economic slowdown in China, the United Nations food agency said on Thursday.

Customers select vegetables at a supermarket in Hanoi September 20, 2014. REUTERS/Kham

The Food and Agriculture Organization’s (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 155.7 in August, down 8.5 points or 5.2 percent from July.

FAO said this was the sharpest monthly drop since December 2008, but August’s reading does not break through another historic level after the index hit a near six-year low in July.

Most global commodity prices have been heading south partly due to fears of a hard economic landing in China and a strong U.S. dollar. A combination of these factors and expectations of ample supply have weighed on food prices.

FAO senior economist Abdolreza Abbassian said there were very few indications of a price reversal in the months ahead.

He said signs of a slowdown in China were being reflected in imports of goods like soybeans, of which the world’s second-largest economy is the biggest importer globally.

“The indications are that in August they were still importing a lot, and they imported more than last August, but they imported much less than in July,” Abbassian said.

“A country of that population and size slowing down affects all sectors, agriculture included.”

Prices fell for all the commodities on the index apart from meat. While steady from the previous month, meat prices have nonetheless dropped 18 percent since their historic peak in August 2014.

FAO raised its forecast for world cereal output in 2015 to 2.54 billion tonnes, which is still below 2014’s record harvest.

The upward revision was due to better prospects for wheat and rice production, FAO said, mostly driven by better than anticipated growing conditions in the Argentina, Brazil and the United States,

The boost from the Americas more than offset a cut to the outlook for maize from the European Union, where hot, dry weather depressed yield expectations.

Reporting by Isla Binnie; Editing by Crispian Balmer

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