Despite a nearly three percent drop in early November, copper prices have been rising since the beginning of the year and currently stand at $4.9 per pound. The price drop in November is a result of increased uncertainty surrounding the FED’s decision on further interest rate cuts, which strongly impacts investment decisions. Additional pressure on prices is created by weaker industrial production data in China, the world’s largest consumer of copper, according to this week’s HUP analyses.
At the same time, major mining companies such as Glencore and Anglo American have reported a decline in production in the first nine months of this year, while reports from Chile indicate a continued reduction in copper production. Despite supply constraints, prices have not risen as weaker demand continues to outweigh the reduction in supply. By the end of the year, we expect copper prices to move towards the $5–6 per pound range.
Four-Year Minimum
Sugar prices this year have recorded a 28 percent drop and currently stand at a four-year low of 14.2 cents per pound. This significant decline is a result of market expectations that a global surplus of about 2 million tons will prevail in the current season, driven by very good harvests in Brazil, India, and Thailand. In India alone, sugar production is expected to increase by 16 percent this season, reaching 34.35 million tons.
Global production is expected to exceed consumption by about 2.8 million tons, representing a turnaround from last year’s deficit. The expansion of the ethanol industry in Brazil could somewhat alleviate price pressures, as mills in this case use a larger share of sugarcane for ethanol production instead of sugar. Despite this, sugar prices are expected to potentially fall further by the end of the year, towards a level of around 14 cents per pound.
