Commodity Tracker: 5 charts to watch this week

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This week, we look at what Emmanuel Macron’s election victory means for French power prospects, record Brazilian soybean prices and rising food inflation. India’s demand for crude and the cost of transporting fuel from Asia to the United States are also of concern.

1. Electricity prices in France continue to rise after Macron’s victory amid near-term nuclear issues



What is happening? Electricity prices in France for 2023 hit a new high on April 25 after President Emmanuel Macron secured a second term following a run-off election on April 24 amid rising costs power generation across Europe. The vote came during a volatile time with Russia’s invasion of Ukraine shifting the goalposts of European energy policy as the continent seeks to end its dependence on Russian energy imports. French one-year power rose 34% in the past month to 260 euros/MWh ($279 MWh), while French winter premiums over European neighbors widened further.


And after? Macron is seeking to bolster France’s nuclear sector amid unprecedented reactor shutdowns and the current fleet set for the lowest annual output in more than two decades. In the long term, however, France should lead Europe’s ambitions to build new nuclear power plants, analysts at S&P Global Commodity Insights said. In its long-term forecast for electricity in Europe, S&P Global predicts that France will see the highest level of new nuclear construction in Europe, but not enough to prevent the drop in capacity to 2050 as existing reactors arrive. at the end of technical life. S&P Global predicts that French nuclear will average 30 GW this summer, the lowest ever recorded for the current fleet.

2. FAO expects food inflation to persist longer


Historically high food prices are here to stay, FAO economist says


What is happening? Global food prices soared to an all-time high in March. The Food Price Index of the United Nations Food and Agriculture Organization, or FAO, reached 159.3 points in March, up 34% from the level a year ago and reaching the highest point since the index’s inception in 1990. The index averages the prices of world agricultural commodities such as basic grains and vegetable oils. The countries were already experiencing a strong price environment since the start of the pandemic in 2020, but the Russian-Ukrainian conflict has further shaken global markets.


And after? Countries are waging a battle against controlling food inflation through policy measures, such as improving subsidies and freezing prices. But food prices are expected to remain high for several seasons, FAO economist Monika Tothova told S&P Global. Wheat, one of the hardest-hit commodities, has risen about 30% since the war began in late February, according to S&P Global data for Russian wheat valuations. Tothova said buyers should be “prepared to pay higher prices for imports”, and further indicated that the impact of the war will be felt throughout the agricultural commodities sector, not just Black Sea exports.


3. Soybean prices surge in Brazil


Soy price


What is happening? The war between Russia and Ukraine continues to generate uncertainty over the world’s supply of grains, crude oil and vegetable oils in the short term, supporting grain and oilseed prices. Absolute FOB South American soybean prices hit all-time highs, hitting $690/tonne on April 20.


And after? With current high prices reducing crush margins at their destinations, markets will be watching how major soybean buyers fare in the near term. Market participants are also closely monitoring the development of soybean plantings in the United States as well as the yield forecast, which will depend on weather conditions in the coming months.

4. Indian refiners benefit from strong domestic and export demand



What is happening? According to the latest Indian Petroleum Ministry survey, Indian crude oil volumes fell 106% in March from 107% in February. Despite the decline, the refinery’s operating rate was still above the 99% level recorded in March 2021. stood at 97%, compared to 89% in 2020-21. This indicates a much lower impact of the second wave of the pandemic in 2021 compared to the first wave in 2020.


And after? The International Monetary Fund expects India’s GDP to grow by 8.2% in the fiscal year 2022-23. Along with the higher GDP growth, analysts expect the country’s oil and gas to remain strong. Strong demand for Indian oil exports, such as gasoil, is prompting Indian refiners to keep their operating rates well above 100%.

5. Jet fuel and diesel deliveries from Asia to the United States and Australia are increasing


Oil prices


What is happening? Transactions for 200,000 tonnes of jet fuel shipments in April with delivery options to the United States have so far been completed. Since there is also a demand for transporting diesel and gasoline to the United States, this is driving up freight, which has increased by more than 40% so far this month for medium-range tankers. on the South Korea-USWC route.


And after? According to data from S&P Global, it will cost more than $76 a ton to move a cargo of 35,000 tons of jet fuel from South Korea to the west coast of the United States on a medium-range tanker. Shipowners compare their earnings on East Asian voyages with the returns they will get if they charter them to deliver shipments of refined products to the US West Coast. In contrast, at current freight, charterers are reluctant to lease vessels and hold cargo. A few more shipments on the transpacific route are expected in the coming weeks.


With analysis and reporting by Andreas Franke, Sabrina Kernbichler, Shikha Singh, Rohan Somwanshi, Rafael Savoia, Sambit Mohanty, Sameer Mohindru and Su Yeen Cheong.

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