Could this be the next taste trend in sugar and olive oil? The price index for this product, drawn from sugar cane, rose sharply last September, marking almost a 50 percent increase from the same month a year earlier. This is a warning echoed by the FAO, the Food and Agriculture Organization of the United Nations. The FAO notes that sugar reached its highest level since November 2010 and attributes much of the rise to a meteorological event that affected major producing countries and elevated production costs.
While inflation stayed steady at 3.5 percent in September, oil prices climbed by 67 percent
Specifically, in global markets this key ingredient in the food industry averaged 162.7 points in September. That is 14.5 points higher than August, a gain of 9.8 percent, and 53 points above September 2022, a rise of 48.3 percent. In its monthly summary of international agricultural prices, the FAO explains that the surge is driven largely by growing concerns about the global outlook and by tighter supplies anticipated in the next 2023-2024 campaign. This outlook reflects broader market anxieties and the imperfect balance between supply and demand, as noted by FAO.
The trend is echoed in Spain. Here, CPI data show sugar prices up 40.5 percent over the previous year, while the month-to-month change since August stands at 0.4 percent. The international increases have not fully translated to price changes within the Spanish market, suggesting local factors and currency dynamics play a role in domestic adjustments.
Experts who prepared the FAO report have been warning for months that Thailand and India, the leading sugar producers, are contending with adverse weather conditions. The El Niño phenomenon has brought drier-than-normal conditions, contributing to rising oil prices and exerting pressure on sugar costs. The FAO notes that the global sugar price rise would have been even larger without mitigation efforts in Brazil, a country crucial to supply and price stability.
The outlook in South America remains cautiously positive, with Brazil currently in the midst of a full sugarcane harvest. The local sentiment contrasts with the mood in parts of Southeast Asia, where weather and supply pressures have been more pronounced. Additionally, a softer Brazilian real against the US dollar has helped temper the pace of monthly price increases in global sugar markets.
Vegetable oils show a retreat
On the flip side of the commodity spectrum, the FAO index for vegetable oils (excluding olive oil) registered a decline. The September average stood at 120.9 points, down 3.9 percent from August, marking the second straight monthly decline.
The drop reflects softer global prices for palm, sunflower, soybean, and rapeseed oils. International palm oil prices fell in September due to higher seasonal production in key producing regions of Asia. The trend for sunflower oil is influenced by active marketing activities among farmers and a slowdown in seed-harvest frequency in the Black Sea region. Price movements for rapeseed oil show a similar softening amid abundant export supplies worldwide. Soy oil, while helped by potential biodiesel demand, mostly followed the same downward trajectory.