Surging Sugar Prices Drive Sharp Climb in Global Food Costs

The United Nations' world food price index saw a significant increase in September, marking the largest rise in 18 months due to a spike in sugar prices. The FAO reported notable increases in cereal, vegetable oil, and dairy prices, while global cereal production forecasts for 2024 were slightly adjusted upwards.

The United Nations' world food price index rose sharply in September, marking its highest increase in 18 months, driven predominantly by a surge in sugar prices, according to data released Friday.

The index, curated by the U.N. Food and Agriculture Organization (FAO) to monitor globally traded food commodities, escalated to 124.4 points from 120.7 in August. This is the highest level the index has reached since July 2023, showing a year-on-year rise of 2.1%.

FAO highlighted that the sugar index jumped 10.4% month-on-month. Factors contributing include unfavorable crop forecasts in Brazil and concerns over India's potential reduced sugar export availability following its decision to use more sugarcane for ethanol production.

Cereal prices also increased by 3%, with wheat and maize export prices climbing, although rice prices dipped by 0.7%.

Vegetable oil prices saw a 4.6% rise, influenced by higher valuations for palm, soy, sunflower, and rapeseed oils. Meanwhile, dairy prices ascended by 3.8%, with noticeable increases in quotations for whole milk powder, skim milk powder, butter, and cheese. Meat prices saw a modest rise of 0.4%.

Additionally, FAO raised its 2024 global cereal production forecast to 2.853 billion tonnes, just above its previous prediction of 2.851 billion tonnes, aligning with increased estimates for rice and wheat output, despite a slight dip in coarse grains production. However, the FAO adjusted its forecast for world cereal stocks at the 2025 season close, trimming it by 1.7 million tonnes to 888.1 million tonnes.

(With inputs from agencies.)