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Food commodity prices see sharpest climb since 2022, led by rising sugar and cereal costs

07 October 20243 min reading

The benchmark for world food commodity prices saw its fastest increase in 18 months in September, with quotations up for all covered commodity groups, led by sugar and cereal, the Food and Agriculture Organization of the United Nations (FAO) reported.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, averaged 124.4 points in September, up 3.0 percent from August and 2.1 percent higher than its corresponding value a year earlier. This marks the largest month-on-month increase since March 2022. Price quotations for all commodities included in the index strengthened, with the increases ranging from 0.4 percent for the meat price index to 10.4 percent for sugar. 

WHEAT PRICES SURGE AMID WEATHER CONCERNS

The FAO Cereal Price Index averaged 113.5 points in September, up 3.3 points (3.0 percent) from August but still 12.8 points (10.2 percent) below its September 2023 value. After declining for three consecutive months, global wheat prices increased in September, largely due to concerns over unfavourable weather conditions in some key exporters. Excessively wet conditions in Canada and the European Union caused harvest delays in the former and led to a sizeable cut to the production forecast for the latter. However, competitively-priced supplies from the Black Sea region capped the increase in prices. 


World maize prices also increased month-on-month, driven by low water levels on the Madeira River in Brazil and the Mississippi River in the United States of America, along with strong domestic demand in Brazil and a solid export pace in Argentina. Among other coarse grains, world prices of barley firmed while those of sorghum dropped. The FAO All Rice Price Index declined by 0.7 percent in September, reflecting generally quiet trading activities and lower Indian basmati quotations, driven by the arrival of freshly-harvested supplies and the Indian Government's removal of the floor price used for basmati export registration.

The FAO Sugar Price Index registered the largest increase in September, rising by 10.4 percent. This was driven by worsening crop prospects in Brazil and concerns that India’s decision to lift restrictions on sugarcane use for ethanol production may affect export availabilities from the country.

The FAO Vegetable Oil Price Index increased by 4.6 percent from August, with higher quotations across the board for palm, soy, sunflower and rapeseed oils. The rise in international palm oil prices was due to lower-than-expected production in major Southeast Asian producing countries, while the rebound in soyoil quotations was primarily due to lower-than-expected crushings in the United States of America. The FAO Dairy price Index rose by 3.8 percent in September, with quotations up for whole milk powder, skim milk powder, butter and cheese. The FAO Meat Price Index increased by 0.4 percent, mainly due to higher poultry meat prices driven by strong import demand for Brazil’s product. 

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