Inclement weather drives up July global sugar prices: FAO

Global sugar prices rose by 12 per cent during July this year compared to June on account of delayed monsoon in India, poor precipitation in Australia and untimely rains in Brazil, United Nation’s body FAO has said.

The Food and Agriculture Organisation’s (FAO) Sugar Price Index averaged 324 points in July, up 34 points or 12 per cent from June, ending the steady fall initiated in March.

“The upturn was triggered by untimely rains in Brazil, the world’s largest sugar exporter, which hampered sugarcane harvesting in July. Concerns over delayed monsoon in India and poor precipitation in Australia also contributed to the price increase,” FAO said in a statement.

FAO’s Food Price Index (FFPI) is a monthly measure of the change in international prices of 55 food commodities.

Monsoon rains in India have been 19 per cent lower between June 1 and August 1, and four states - Karnataka, Rajasthan, Gujarat and Maharashtra - are facing drought-like situation.

The retail sugar prices have risen by Rs 5 a kg to Rs 39-40 across the country in the past month amid concerns that deficient monsoon would hit sugarcane output and yield in Maharashtra and Karnataka.

India is estimated to have harvested 357.67 million tonnes of sugarcane in the 2011-12 crop year (July-June). The country’s sugar production is estimated at 26 million tonnes in 2011-12 marketing year (October-September).

However, the area under sugarcane, a major kharif (summer sowing) crop, is higher at 52.88 lakh hectares against 50.59 lakh hectare so far in the ongoing kharif season.

FAO said after three consecutive months of decline, global food prices rose by 6 per cent in July due to rising prices of wheat, maize and sugar.

FFPI averaged 213 points, up 12 points from June, the global body on the farm sector said.

“The Index’s sharp rebound was mostly driven by a surge in grain and sugar prices. International prices of meat and dairy products were little changed,” FAO said.

The severe deterioration of maize crop prospects in the US due to drought damage pushed up maize prices by almost 23 per cent in July, it said.

International wheat quotations also rose by 19 per cent amid worsened production prospects in the Russian Federation and expectations of firm demand for wheat as feed because of tight maize supplies, FAO added.