Sugar Rises as Copper Falls on Dollar and China

Brazil’s ethanol economics are adding another layer of support. Higher oil prices are encouraging mills to divert more cane to fuel production, with the share of sugarcane used for ethanol reaching 53.8% by mid-August, up 6 percentage points from a year earlier. That tightens export availability just as the market is already contending with weather setbacks in Brazil and India.

Copper is moving the other way. Comex copper fell 1.56% to 14,454 dollars a ton, extending losses into a third session as hotter U.S. inflation data and firmer retail sales cut expectations for early Federal Reserve easing and lifted the dollar to an 18-month high. A stronger greenback makes dollar-priced commodities more expensive for non-U.S. buyers, while Chinese downstream factories are holding back purchases because they do not accept current price levels.

Inventories are also building. Cathode stocks in key Chinese consuming regions rose by 12,100 tons in a week to 110,000 tons as of Oct. 15, forcing sellers to cut prices to clear cargoes. Market participants say the lack of buying from China suggests the rebound in copper lacks a firm base, especially if the dollar stays elevated and stockpiles continue to rise.

The divergence matters for investors because it points to different drivers across commodity classes: weather and energy economics are tightening sugar, while macro and demand signals are weakening copper. For miners, the message is mixed. Southern Copper and Freeport-McMoRan remain tied to copper’s price direction, but current technical readings show both stocks have cooled after strong runs, with SCCO near its 50-day moving average and FCX below its 50-day average after a sharp pullback.

With the dollar still strong, U.S. policy expectations less dovish and Chinese restocking absent, copper could remain under pressure. Sugar, meanwhile, will stay sensitive to Brazil’s harvest pace, India’s monsoon pattern and oil-driven ethanol demand.