Global sugar prices surge 7.5% on supply fears in Brazil, India

Global sugar prices surged 7.5% in a month, driven by concerns over reduced production in Brazil and supply disruptions in India and Thailand.

The Ministry of Agriculture, Food and Rural Affairs said Friday that the UN Food and Agriculture Organization's global food price index came in at 130.8 points in May, down 0.2% from the previous month's 131.0 points. Despite the overall decline, sugar and grain prices both rose.

The sugar price index climbed 7.5% from the previous month to 95.1 points. Expectations that global sugar supplies will tighten over the coming months drove the increase. A projected decline in the share of sugarcane destined for sugar production in Brazil's key growing regions, combined with concerns that El Niño could reduce output in India and Thailand, pushed prices higher.

The grain price index rose 2.6% from the previous month to 114.3 points. Forecasts of lower wheat output in major exporting countries, including the United States, along with rising energy and fertilizer costs, weighed on the market. Rice prices also climbed, reflecting weather concerns in some Asian exporting countries and higher oil prices.

Vegetable oil prices, by contrast, fell 4.6% to 185.0 points, pulled down by declines in palm oil and soybean oil. The dairy price index edged down 0.5%, while the meat price index inched up 0.1% on higher beef and lamb prices.

The FAO projected global grain output in the next crop season at 2.9821 billion metric tons, down 2.0% from the previous year, while consumption is forecast to rise 0.6% to 2.9693 billion metric tons.

Meanwhile, domestic consumer prices for agricultural and livestock products rose 1.8% in May from a year earlier, staying below the overall consumer price inflation rate of 3.1%. The ministry said it plans to monitor supply and demand conditions for individual commodities and step up management of agricultural and livestock supplies in preparation for possible weather disruptions this summer.