World sugar prices hit 13-year high in Sep due to El Nino; food price index 'mostly stable': FAO

Global sugar prices soared to their highest level in almost 13 years in September due to the El Nino weather phenomenon in India and Thailand, the UN food agency said on Friday (Oct 6), while noting that the overall food index was mostly stable nevertheless.

Declines in indices for vegetable oils, dairy and meat offset the surge in sugar and maize prices, said Food and Agriculture Organization (FAO).

World food price index

According to the UN food agency, the price index which tracks the most globally traded food commodities averaged an estimated 121.5 points in September against the revised 121.6 for August, which previously stood at 121.4 points.

As per Reuters, last month’s figure was 10.7 per cent down year-on-year and 24 per cent below the all-time high reached in March 2022, after the Russian invasion of Ukraine.

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The UN food agency’s cereal index rose 1.0 per cent from the previous month with prices in maize rising as much as seven per cent which has been attributed to a strong demand for Brazilian supplies and slower selling in Argentina as well as an increased barge freight rates in the United States.

Meanwhile, international wheat prices dropped by 1.6 per cent after Russia showed strong supplies and good production prospects, according to the FAO. The price for rice had skyrocketed nearly 10 per cent in August only dipping 0.5 per cent last month amid low import demand.

The UN food agency also noted a drop in the prices of dairy products by 2.3 per cent marking a ninth successive monthly fall which has been attributed to low global import demand and ample stocks.

The FAO has also forecasted the world cereal production this year at 2.819 billion tonnes slightly over the previous estimate of 2.815 billion. This is almost entirely driven by more positive yield estimates for Russia and Ukraine due to continued favourable weather conditions, said the UN food agency.

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Global sugar prices hit 13-year high

While the food prices across the world steadied, the FAO noted that their Sugar Price Index jumped by 9.8 per cent in September when compared to the month before that, reaching the highest point since November 2010.

This surge has been attributed to the El Nino weather phenomenon which has affected the production in India and Thailand. The climate pattern is often marked by warming ocean surface temperatures and extreme weather events.

The rise in FAO’s Sugar Price Index for a second consecutive month has also raised concerns over a tighter global supply outlook in the upcoming season.

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“This mainly reflects early forecasts pointing to production declines in key sugar producers, Thailand and India, due to drier-than-normal weather conditions associated with the prevailing El Nino event,” said the FAO.

“Higher international crude oil prices also contributed to the increase in world sugar prices,” it added.

(With inputs from agencies)

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