Rome, Aug 2 (IANS): Global prices for grains and cereals dropped sharply in July, mitigating the impact of rising prices for vegetable oil, meat, and sugar, according to a report issued Friday by the United Nations Food and Agriculture Organisation (FAO).

The sub-index for grains and cereals declined by 3.8 percent in July, compared with the May index. However, compared to the previous year, the cereal price index fell by 12.0 per cent.

FAO attributed the decrease to the "quiet" trading for Indica and Japonica rice and strong wheat harvests in the Northern Hemisphere and corn in Argentina and Brazil. Barley and sorghum prices also fell in July, FAO said.

Meanwhile, other sub-indexes were mixed, with prices for vegetable oils and meat rising significantly, sugar prices slightly higher, and dairy prices unchanged, Xinhua news agency reported.

Vegetable oils showed the biggest month-on-month increase of 2.4 percent, reaching a peak in 18 months. FAO said the increase was widespread, including higher prices for palm, soy, sunflower, and rapeseed oils. Among those, the soy oils price index rose the most due to the demand in the biofuel sector in the Americas. "Deteriorating crop prospects" for sunflower and rapeseed oils were also a factor, FAO said.

Meat prices climbed by 1.2 per cent from the June level and were now slightly higher compared with the previous year.

Sugar prices, meanwhile, rose by 0.7 per cent, due in part to unusually weak production in Brazil in the first half of July.

Dairy prices were balanced compared to June as weakened demand balanced short-term production issues in Western Europe and Oceania.

Overall, lower prices for grains and cereals -- the largest component in the overall FAO Food Price Index -- were enough to balance out the increases of other sub-indexes. As such the overall index was virtually unchanged compared to June.