The outlook for world supplies of cereals and vegetable oils improved in June, contributing to the third straight monthly drop in global food prices, the UN’s food agency said.

The Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 206 points in June, down 3.8 points or 1.8 per cent from May.

The figure was almost 2.8 per cent below June 2013 and the lowest since January, as cereal prices fell on better crop prospects and reduced concern over disrupted shipments from Ukraine.

The FAO’s cereal price index averaged 196.2 points in June, down 10.9 points or 5.2 per cent from a revised 207 points in May, mainly due to falls of almost seven per cent in wheat and maize.

The UN agency raised its forecast for global cereal production for 2014 by 21.5 million tons, compared with a previous forecast given in May, to 2.478 billion tons.

The forecast was boosted by a more favourable production outlook for maize, almost one per cent higher than it reported in May.