(Recasts lead, adds detail)
ROME, July 3 (Reuters) - 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 United Nations’ food agency said on Thursday.
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 206.0 points in June, down 3.8 points or 1.8 percent from May.
The figure was almost 2.8 percent 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 percent from a revised 207.0 points in May, mainly due to falls of almost 7 percent in wheat and maize.
The U.N. agency raised its forecast for global cereal production for 2014 by 21.5 million tonnes, compared with a previous forecast given in May, to 2.478 billion tonnes.
The forecast was boosted by a more favourable production outlook for maize, almost 1 percent higher than it reported in May but still 1.4 percent down from 2013.
The FAO revised its estimate for world cereal stocks at the close of the crop season ending in 2015 to 604 million tonnes, up 28 million tonnes from the previous estimate. This would represent a 5.3 percent jump from the 2013-2014 season and the highest level for more than a decade.
Vegetable oil prices fell 2.4 percent in June, year-on-year, as prices of palm oil, the most widely traded edible oil, dropped to a nine-month low and expectations for a record world soybean crop dragged soy oil prices to a four-year trough.
FAO said it expected global wheat output this year to be 702.7 million tonnes, slightly higher than the forecast it gave in May, but 1.8 percent lower than last year’s record harvest. (Reporting by Isla Binnie; Editing by Pravin Char)