A central Illinois farmer harvests his soyabean field. (AP Photo/Seth Perlman, File)

Global food prices fell to the lowest level in four years in 2014, as plentiful supplies of cereals, dairy products, sugar and vegetable oils pushed markets lower.

The UN Food and Agricultural Organization said its December food price index fell more than 9 per cent from a year before. In 2014, the index averaged 202 points, down 3.7 per cent from 2013, the third consecutive yearly fall.

“We’ve had a year with very good supplies,” said Abdolreza Abbassian, a senior economist at the FAO in Rome.

Favourable weather in key food producing regions led to bumper harvests especially in grains and oilseeds, while political instability led to volatile prices in certain agricultural commodities.

Dairy products faced the largest declines, thanks to a rise in exports and demand falling among some of the leading importers, such as China and Russia. Prices, which started the year at record highs, fell 34 per cent in December from a year before, helped by declines in milk powders, butter and cheese.

Meat products were the only food group within the FAO Food Price Index to see an increase during 2014, rising 9.9 per cent in December from the same month in 2013. “Meat prices continued to be supported by very strong demand,” said Mr Abbassian.

Vegetable oils fell 18 per cent as supplies were supported by good sunflower seed harvests in the Ukraine and Russia. Farmers there actively sold their crops amid political instability, depressing prices.

Palm oil, the widest used vegetable oil, fell to a five-year low although they rebounded at the end of the year on concerns of monsoon flooding in Malaysia.

34%

Fall in dairy prices in December, from a year earlier

A global surplus and high levels of inventories depressed sugar prices by 6.8 per cent, while cereals fell 4.7 per cent. The price fall was limited by concerns over Russian trade restrictions on grain, as well as worries about rice output due to bad weather in some producing countries.

The FAO said it was closely watching the continuing tensions over Ukraine, as well as international economic growth.

Adverse weather conditions were also on its radar, including the possible El Niño weather phenomenon which could affect weather in Brazil during the key growing period for soyabeans as well as bringing dryness to Australia, a leading wheat producer.

Arctic conditions in the US, which was threatening the development of wheat, is providing price support for the grain, as is uncertainty about weather in Russia.

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