Sweetness by the pound: Sugar and currency correlations in pre-Brexit UK prices

Abstract

In observing British pound spot prices and European sugar import prices over the 2004–2016 period, an unusually strong currency-commodity correlation is detected and statistically validated. This correlation is the result of a single firm dominating European refining, effectively fixing the import price to sterling. This paper proposes a generalized pricing-power detection framework based on currency-commodity correlation and corporate consolidation to efficiently detect such future instances, and to inform future industrial organization and currency-commodity research.