International sugar prices witnessed a significant upswing in September, marking the second consecutive monthly increase, according to the latest report from the Food and Agriculture Organization of the United Nations (FAO). This surge was primarily attributed to growing concerns regarding a tighter supply outlook in the upcoming 2023/2024 season.
The FAO's sugar price index averaged 162.7 points in September, representing a substantial increase of 14.5 points or 9.8 percent compared to August. This remarkable jump catapulted the index to its highest level since November 2010.
The primary driving factors behind this surge were the early forecasts of production declines in key sugar-producing nations, namely Thailand and India. These forecasts were influenced by drier-than-normal weather conditions associated with the prevailing El Niño event. Additionally, higher international crude oil prices played a role in boosting global sugar prices.
Nevertheless, the increase in sugar prices was somewhat mitigated by the large crop currently being harvested in Brazil, thanks to favorable weather conditions. Moreover, the depreciation of the Brazilian Real against the United States dollar helped limit the month-on-month rise in world sugar prices.
In addition to the sugar market, international maize prices also experienced a significant uptick of 7 percent in September. This increase can be attributed to several factors, including strong demand for Brazil's maize supplies. Slow farmer selling in Argentina and elevated barge freight rates due to low water levels on the Mississippi River in the US further contributed to the price hike.
The FAO's report also highlighted that among other coarse grains, world sorghum prices followed the trend of maize price increases, while barley prices remained relatively stable. In contrast, international wheat prices continued their descent, falling by 1.6 percent month-on-month. This decline was supported by ample supplies in the Russian Federation, where production prospects improved in September.
Despite the surges in sugar and maize prices, the FAO Food Price Index remained stable in September. The increases in these commodities were offset by declines in quotations for vegetable oils, dairy, and meat.
The FAO Food Price Index, which monitors monthly changes in the international prices of globally-traded food commodities, averaged 121.5 points in September, compared to 121.4 points in August. At this level, the index stands 10.7 percent lower than its value a year ago and 24.0 percent below its all-time high reached in March 2022.
The FAO Vegetable Oil Price Index declined by 3.9 percent from August, with international quotations for palm, sunflower, soy, and rapeseed oils all registering declines. This drop was partly due to elevated seasonal production and abundant global export supplies.
Furthermore, the FAO Dairy Price Index decreased by 2.3 percent from August, marking its ninth consecutive drop. Lackluster global import demand and ample stocks in leading producing regions, coupled with the euro's relative weakness against the US dollar, exerted downward pressure on international dairy prices.
The meat price index also dipped by 1 percent from the previous month, driven by a combination of weak import demand and ample global export availabilities for pig, poultry, and ovine meats. However, international bovine meat prices rebounded, fueled by strong import demand for lean beef, especially in the United States.
The rice price index witnessed a marginal decline of 0.5 percent month-on-month in September. Despite this slight decrease, prices remained significantly higher, up to 27.8 percent above their year-earlier value. This decline was influenced by generally low import demand, although price falls were somewhat constrained by lingering uncertainties surrounding India's rice export restrictions and diminishing supplies ahead of new-crop harvests in Asia.
The FAO's comprehensive report provides valuable insights into the dynamics of the global sugar market and its interplay with other food commodities, offering stakeholders critical information for making informed decisions in the ever-changing world of international trade.
Comments