Food and energy prices drive the index higher at the current edge
Hamburg, May 16, 2024 – After the HWWI commodity price index had tended to decline in the last reporting period (November to January), the index also decreased in February, reaching a local minimum of 166.2. Since then, the index has been rising slightly, increasing by 4.1% in March and by 5.7% in April compared to the previous month. In April, the index averaged 182.9, still 4.9% below the level of the same month last year (as of May 5, 2024).
Developments in the gas and oil markets have a significant impact on the HWWI commodity price index: European gas prices showed mixed trends, with a local minimum in February due to mild weather, followed by an increase in March and April to 286.7 in April 2024. However, the European gas price is still 33.3% lower than in the same month last year. On the other hand, American gas prices showed a slight decline in February and March, followed by a slight increase in April. Oil prices, however, show a more uniform trend and have been rising since the beginning of the year. Thus, the Crude Oil Index is now 6.8% above the value of the same month last year, which is mainly due to the tense geopolitical situation. Overall, the energy commodity index fell by 3.9% in February but rose by 4.5% and 4.8% in March and April, respectively.
Particularly strong price increases have been observed for cocoa and coffee. The price of cocoa has risen by an average of 27% per month over the past three months, continuing its record upward trend. The cocoa index is 249.5% above the value of the same month last year in April. Reasons include continued harvest problems due to heat, drought, and heavy rain in key producing countries such as Ivory Coast, Ghana, and Nigeria. Additionally, longer rainy periods lead to plant diseases (CSSVD virus), causing cocoa trees to die, leading to longer-term supply reductions. Poor weather conditions in Brazil and Vietnam also led to a poorer coffee harvest, causing coffee prices to tend to rise further. In April, the coffee price rose by 16.4% compared to the previous month and is 21.5% higher than the same month last year, reaching a record value of 200.8. Prices for oils (palm oil, coconut oil, and sunflower oil) also tended to rise over the past three months.
Overall, the food and luxury goods index has increased significantly again in recent months (by up to 12.8%), now reaching a value of 171.3. The index last noted at this level in the spring of 2022. The industrial raw materials index also showed an upward movement recently (especially in April) and now stands at 130.6. For the first time, the index also rose compared to the same month last year. This increase is mainly due to rising prices for copper and aluminum (the largest weights in the industrial raw materials index). Here, prices rose significantly in March and especially in April (8.8% and 11.8% compared to the previous month, respectively). The rise in copper prices is primarily due to a supply shortage from Chinese mines. A revival in demand, especially from China (the world’s largest copper consumer), could also lead to significantly rising prices in the future.
The new sanctions against Russia by the United Kingdom and the USA are also expected to cause increases in the prices of copper, nickel, and aluminum. The combination of high demand and reduced supply is likely responsible for the rise in aluminum prices in April. But even less heavily weighted industrial metals such as tin (14.9% compared to the previous month) and zinc (10.3%) showed significant price increases in April. A recovering electronics industry and concerns about supply cuts may have caused these price increases.
In contrast, a different picture emerges for iron ore and scrap steel, whose index values have tended to decline over the past three months. In particular, the iron ore index fell by 12.3% in March compared to the previous month. Increasing shipments at the beginning of the year and the currently weak demand recovery (especially in China) led to an oversupply of iron ore, putting strong downward pressure on prices. This is also likely to have led to falling prices for scrap steel.