By Steve Scherer

ROME (Reuters) - World food prices rose in September to their highest since March 2015, led mainly by sugar, the United Nations food agency said on Thursday.

Except for a small dip in July, the Food and Agriculture Organization's (FAO) food price index has been increasing steadily since January, when it hit a seven-year low.

The index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 170.9 points in September, 2.9 percent above the month before and 10 percent higher than the same month last year.

Sugar prices surged 6.7 percent in September from the previous month, largely because of bad weather in Brazil, the world's biggest sugar producer and exporter, FAO said.

While cereal prices declined slightly, meat edged up and dairy and vegetable oil prices increased.

"A lot of the September increase has to do with sugar, so if sugar were to stop increasing, the index would be more or less flat," said FAO senior economist Abdolreza Abbassian. "But the scope for big declines is not there."

FAO raised slightly its forecast for world cereal production in the 2016-17 season rose to 2.569 billion tonnes, which would be a new record high and a 1.5 percent increase on the previous season. World wheat output is seen at 742.4 million tonnes, up slightly from the previous forecast of 740.7 million tonnes.

Cereal stocks are seen at 659.9 million tonnes in the 2016-17 season, down slightly from the previous month's forecast.

(Reporting by Steve Scherer. Editing by Jane Merriman)