As per the latest Food Price Index released by the Food and Agriculture Organization of the United Nations (FAO), global sugar prices went up by 11.9 percent (11.3) from July, currently standing at 106.4 points. As per the report, the prices rose primarily due to the growing concerns over the “global sugar supply outlook in the 2026/27 season.”
Hot and dry weather in Europe, El-Niño’s effect on production in key Asian countries for sugar production, lower production in Brazil, and India’s duty-free raw sugar imports are some of the reasons driving sugar prices up.
Explaining the major factors, FAO said, “The surge reflected expectations of lower sugar beet yields in the European Union due to adverse weather, concerns over the impact of El Niño on production prospects in key producing countries in Asia, lower sugar production in Brazil, and India’s announcement of duty-free raw sugar imports.”
FAO Food Price Index measures the monthly change in prices of a basket of food commodities. The index is calculated as the average of five commodity group price indices: cereals, vegetable oils, meat, dairy, and sugar, weighted according to their average export share over 2014–2016.
The FAO Food Price Index has experienced a broad-based increase of 1.9 percent, or 2.5 points, from July, currently averaging 133.3 points. The index is 16.8 percent lower than its peak in March but remains 2.5 percent higher as compared to last year. The surge is led primarily by sugar, which has undergone the steepest rise among the five commodities.
The supply is hindered due to various factors, including climatic disruption, geopolitical tensions, and disturbances in trade logistics. FAO Chief Economist Maximo Torero said, “August’s increase in global food prices is a warning that the risk premium is returning to food markets: climate shocks, geopolitical tensions and disrupted trade logistics are converging to tighten supply expectations, showing that resilience, open trade and secure input flows are now central to global food-price stability.”
Apart from sugar, the FAO Cereal Price Index also increased by 2.2 percent from July to 116.3 in August amid the rise in global prices of all major grains due to robust import demand, weather-related concerns over crop production, and uncertainty regarding trade flows.
The Vegetable Oil Price Index went up by 0.6 percent to 196.9 points in August, the Meat Price Index surged 1 percent to stand at 127.9 points, and the Dairy Price Index rose by 2.3 percent from July, currently reaching 119.2 points.
