ROME (Reuters) - A fall in world food prices in July after five monthly increases suggests farmed commodities are unlikely to get much more expensive in the near future, a senior economist at the United Nations food agency said on Thursday.

The Food and Agriculture Organization's (FAO) food price index fell 0.8 percent in July to 161.9 points, interrupting an upward path that began after it hit a near seven-year low in January.

Food on international markets was 1.4 percent cheaper than in July last year, according to the index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar.

"This feeling that prices just started to go up one month after the other may not hold true," FAO senior economist Abdolreza Abbassian said, suggesting predictions for stable prices for the next decade made in early July are playing out.

Abbassian said good weather was favoring cereal crops, leading to bigger supplies. Cereal prices slumped 5.6 percent on the FAO index in July, and only rice registered a gain.

Vegetable oils were the second biggest loser, falling 2.8 percent mainly due to a five-month low in the price of palm oil thanks to a recovery in production in Southeast Asia and subdued global import demand.

July's forecast, made by the FAO and Organization for Economic Cooperation and Development (OECD), was based on expectations of higher agricultural productivity and slightly larger crop areas.

Exchange rates also look poised to weigh on prices, Abbassian said. "If there are no weather surprises we are in for huge crops. This certainly will have some weight on prices for the remainder of the season," he said.

(Reporting by Isla Binnie; editing by Jane Merriman)