World food prices fell to their lowest since August 2010 in September as prices of all major food groups except meat dropped, led by a sharp decline in dairy prices, the UN's 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 191.5 points in September, down 5.2 points or 2.6 per cent from August.

The figure was 12.2 points or 6.0 per cent below September 2013.

It was the sixth consecutive slip in the index, which FAO said was the longest period of continuous falls since the late 1990s. Affecting all international commodity prices is "the US dollar's broad appreciation," FAO said.

The Russian ban on dairy imports from countries that have imposed sanctions on Moscow over the conflict in Ukraine continues to weigh on dairy prices, FAO said.

European Union dairy farms are moving away from cheese production and raising butter and skimmed milk output, which is in turn stimulating powdered milk production "as manufactures seek to adjust products to ensure the best returns," FAO said.

Bucking the trend, meat prices gained marginally to 207.8 points in September, 0.3 of a point higher than its revised value for August. At historic highs, meat prices may have "reached a peak," FAO said.

Underpinning falling prices are strong output forecasts for cereal and wheat, and expected high levels of cereal stocks at the end of the year.

FAO raised its forecast for global cereal production for 2014 to 2.523 billion tonnes, 65 million tonnes higher than its May forecast.

The agency also raised its world wheat output forecast to 718.5 million tonnes, a new record, versus 716.5 million tonnes previously, and predicted world cereals stocks at the end of the 2015 season would be 627.5 million tonnes, versus 616.0 million tonnes in its previous forecast. – Reuters