Global sugar prices surge on rising oil rates, FAO warns of further upside if Iran war continues
Food and Agriculture Organization reported global sugar prices rose 7.2% in March, hitting a five-month high as rising oil prices boost ethanol demand, especially in Brazil. Higher energy costs are shaping food markets, though strong cereal supplies are keeping overall inflation relatively stable.
Paris: Global sugar prices rose sharply in March, reaching their highest level since October 2025, as higher crude oil prices pushed expectations that more sugarcane could be diverted towards ethanol production, the United Nations Food and Agriculture Organisation said, Reuters reported.
The increase came as overall world food prices climbed to their highest level since September last year, according to the FAO. The agency said the rise in sugar prices was mainly linked to firm energy markets, which are influencing how major producers, especially Brazil, use sugarcane.
FAO Chief Economist Maximo Torero said that while the impact of the ongoing Middle East conflict on food prices has so far been limited, rising oil prices have started to influence markets. He noted that strong global cereal supplies have helped keep overall food inflation in check.
However, he warned that if the conflict continues for an extended period and input costs such as fertilisers remain high, farmers may cut back on usage, reduce planting, or shift to less input-intensive crops. Such changes could affect future crop yields and influence global food supplies and prices in the coming months.
The FAO Food Price Index rose 2.4% in March from the previous month and was slightly higher than a year ago, though still well below its peak in 2022.
Among key commodities, sugar recorded one of the steepest increases, rising 7.2% during the month. The surge reflects expectations that higher oil prices will encourage ethanol production, reducing the amount of sugar available in the market.
Meanwhile, cereal prices rose moderately, with wheat prices increasing due to concerns over crop conditions in the United States and likely lower planting in Australia. Rice prices declined due to weaker demand, while maize prices saw only a slight increase amid ample global supply.
Vegetable oil prices continued their upward trend for the third straight month, supported by stronger biofuel demand linked to higher energy prices. Meat prices also edged up slightly during the period.
In a separate update, the FAO raised its forecast for global cereal production in 2025 to a record level, indicating that supply conditions remain comfortable for now.
Despite stable supplies in some segments, the agency cautioned that rising energy costs and shifting production patterns—particularly in sugar and ethanol—could shape global price trends in the months ahead.
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Source : Chinimandi
