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October levels – Stock to Use Ratio

The global stock-to-use ratio for soybeans have rise by 1.5% in October 16-17, now at 23,5% compared to 22% in September 16-17. Also, the ratio is lower this year than last year, which is suitable for farmers’ income.

The USDA Supply/demand numbers for soybeans was considered higher than trade expectations in USA. The average yield was at 51.4 bushels per acre compared to trade estimates at 51.5. However, world-ending stocks were more than expected. They came in at a near record 77.36 million tonnes from trade expectations (71.15-74.90 range).

October prices

After reaching $11.80 per bushel in June 2016 soybean is now (19 October) at $9.76. This fall comes from an increase in the global inventory as stock-to-use ratio went higher.

Also, crops rating has improve compare to last week (from 48.7 to 50.7 bushels per acre). All this will tend to bring the price lower unless Chinese buying stays strong or weather difficulties appear.

Closer look at this week prices fluctuations

During the weekend (14-16 October), soybean price in Chicago went up encouraged by strong demand. The cause; A delegation of soybean importers from china (the biggest importer) has signed agreements to buy 5.1 million tonnes of U.S soybeans valued at 2.1 billion this Friday in Iowa.

Monday 18 October, price turned lower. Producers take advantage of good weather and are marketing their crops also to profit from actual “high” prices. This already brought the price slightly lower.

The past rainy days in southwest Brazil favoured oil moisture.  In Argentina growers are expecting 6-10-day rains, which may slow planting process but maintain favourable conditions. As a consequence, the supply increases and soybean futures for November felt by 6% at the CBOT.

Forward curve

The forward curve shows an irregular path. Soybean is a commodity that follows the weather as the price does. At the beginning, the curve shows a market in Contango, which means that the future price of the commodity is expected to be higher than the future spot price. People are willing to pay a premium in order to buy the good in advance and not to take care of the storage.

Later, from August we can see the curve in Backwardation, which means that the future price is lower than the market today and also when delivery is cheaper today.

The main reason is that there might be a shortage at this moment or simply because of the weather during that season.

Our recommendation would be to be long, as we are expecting an increase of price in the next 3 to 6 months.


AgWeb – The Home Page of Agriculture. (2016). Soybean Prices, Futures & Market Updates | [online] Available at: [Accessed 19 Oct. 2016].

Anon, (2016). [online] Available at: [Accessed 19 Oct. 2016]. (2016). Soybean Reports. [online] Available at: [Accessed 17 Oct. 2016].

Elsewhere, W. (2016). Weekend Rains Favored Far Southern Brazil; Fairly Dry Elsewhere. [online] AgWeb – The Home Page of Agriculture. Available at: [Accessed 19 Oct. 2016]. (2016). US Soybeans Price – [online] Available at: [Accessed 18 Oct. 2016].

Knorr, B. (2016). Morning Market Review by Bryce Knorr. [online] Available at: [Accessed 19 Oct. 2016]. (2016). Futures Forward Curve. [online] Available at: [Accessed 19 Oct. 2016]. (2016). Why Did Soybean Prices Fall in October? – Market Realist. [online] Available at: [Accessed 16 Oct. 2016]. (2016). Corn Prices Gain Ahead of Crop Report; Soybeans Mixed. [online] Available at: [Accessed 19 Oct. 2016]. (2016). Grains, Soybeans Back Off Recent Highs Amid Farmer Selling. [online] Available at: [Accessed 19 Oct. 2016].

Reuters India. (2016). GRAINS-Soybeans rebound on strong demand, corn ticks up. [online] Available at: [Accessed 19 Oct. 2016].

On September 15, the Chinese celebrated the Moon Cake Festival, also known as Mid-Autumn Festival. Prior to that important event local distributers stocked up inventories to cover exceptional demand. However this cannot explain the decrease of Malaysian inventories to the lowest since 2011. The data set from the Malaysian Palm Oil Council, pictured in the graph below, shows a strong negative correlation of between Stocks and Local Prices (in RM) of 0.764. This is the expected behaviour of the two variables, as an increase in inventories represent oversupply. We can see in the graph that as production (in black) starts to fall around October 2015, Inventories follow and the price rise. Despite an increase in production starting from February 2016, prices kept stable and inventories fell.

Furthermore the proposed policies by the European Commission following the 2013 Report on the impact of EU consumption on deforestation will start to impact the business, as the Malaysian Palm Oil Council reports. A ratification of these policies by the European Parliament will impose higher costs for the production of Palm Oil, and will in consequence lead to an increase in price. The propositions concerning the palm oil industry include:

(1) The extension of sustainability criteria for biofuels

(18) Mandatory labelling of the forest footprint of products

(23) Increase of import tariffs for commodities associated with deforestation

Another shift in the industry stems from the decrease in import duty by the Indian Government in late September. To keep consumer prices stable during the festive period duties of Refined Palm Oil (RBD) has been reduced to 15% from 20% and those for Crude Palm Oil (CPO) from 12.5% to 7.5%. Local Indian refiners, currently at 35-40% of capacity utilisation strongly oppose the decision. Their Malaysian counterparts in the meantime benefit from duty free export of RBD and a 6.5% duty on CPO. Indonesian exporters pay a fixed rate of $30 per tonne on RBD and $50 per tonne on CPO. This example shows how governments can favour the value adding activities in their own country in order to grow and protect the economy. The example of India will show, if they can innovate to keep up with competition despite a decrease in protectionism or if they will loose business to their Indonesian and Malaysian competitors.

The forward curve for CPO shows an initial inverse, which turns to a carry for settlement after May 2018. Our recommendation therefore would be to go short at the end of 2016 and long around April 2018.[i]

[i] References

CHOW, Emily, 2016. PREVIEW-Malaysia’s Aug palm oil inventories seen at lowest since early 2011. CNBC [online]. 16.10.16. [cited the 19.10.16]. Available from :

CME GROUP INC. CME Group [online]. 17.10.16. [cited the 17.10.16]. Available from :

DEVRIENDT, Nathalie et al. The impact of EU consumption on deforestation: Proposal of specific Community policy, legislative measures and other initiatives for further consideration by the Commission [online]. European Union, 2013. [cited the 19.10.16]. Technical Report-2013-065. ISBN 978-92-79-28928-6. Available from :

MPOC. Malaysian Palm Oil Council. [online]. 1.10.16. [cited the 17.10.16]. Available from :

SAGHAL, Ram, 2016. Refined palm imports from Indonesia rising. The Economic Times [online]. 17.10.16. [cited the 19.10.16]. Available from :

Since the 14th of October, some news regarding OPEC and its potential future cut on the crude oil production had a few impact on the industry. In fact, on the 30th of November, In Vienna, an extraordinary meeting organised by OPEC will take place in order to discuss on quotas of production that each member will have to respect in order to increase the price of crude oil. (The extraordinary meeting purpose will be discussed more in our Bulletin n°2 of the 18th November 2016)

During the Oil & Money Conference that took place in London the 18 and 19th October 2016 and that focuses on the challenge of managing oil price downturn, the Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih has claimed that many nations are ready to join OPEC in cutting production to meet an improvement on the future oil prices. No nation has been precisely named, but Russia has already affirmed that a freeze or cut will be envisaged on the contrary of Mexico and Norway who have no intention to cut their production.

This intervention and the last rumours predicting that OPEC will make the decision to decrease its production tend to mark the end of two years of “chaotic” prices since it may achieve a first step ahead and be between 50 and 60 US dollars.

This last week, this news added to the decline of production in China, fall in inventories in USA and a slightly weaker dollar lead to a short increase of the WTI and Brent crude oil. As you can see on the graph attached, the price of crude oil has increased of $ 1.45. As we noticed, the sharp increase has been identified these last two days which correlate with the Oil & Money meeting and the optimist speech made by the Saudi Arabia’s minister of Energy and Industry.

Our recommendation for all stakeholders is not to take for granted the increase of the price before and after the meeting. Because this price increase is a motivation for speculation and if this increase doesn’t balance with the production cut announced and the demand, the oil price will struggle attain the desired price by the oil industry. In the next following days we will closely look if the oil price increases due to speculation and the approach of the meeting. The speech made by Khalid Al-Falih is optimist about the future action that will be announced in in Vienna but real conclusion can only be taken after that.

Crude oil price on the 19th of October 2016 at 4.00 pm: $ 51.77/barrel

Source :


In the case you need to refresh your memory about sugar commodity, we recommend you to wath this video :

Price movement 2004-2016

price in cents/pound

As we can see in this graph, sugar prices volatility is high and the price tend is to increase. It is due to several factors :

• In 2011, the price went down because of the sugar world production surplus
• Ethanol demand
• Increase in production cost in Brazil
• Inflation, sugar shown significant correlation to inflation rates (dollar and real)

The graph above shows clearly the inverse relationship between the US inflation rate and the US sugar futures contract price.

The relation between stock and sugar prices

After a drop in production during the past crisis, the sugar production have recovered and reached an historical peak. But since 2013, sugar production slowed down. For the past decade, stock levels have increased as a response function to growing positive production. But since 2014 stocks have falle dramatically because of two main factors. First, the demand of biofuel has significantly increased boosted by new biofuel policies and as an alternative of oil.
Finally, the reduction of subsidies programmes in Europ led to a diminishing in sugar supply.

In parallel, the global sugar consumption reached a record of 174 million metric tons. The reason is that population in developing economies grow and increases their income levels and consumption of new food. If the global sugar consumption continues to expands while production decelerates, it will result in a sugar price increase.

Exportation VS Importation 2011-2014

Major sugar exporting countries VS Major sugar producers in 2014

Major importing countries

The Brazilian and Chinese effect : because Brazil is the world’s largest producer and exporter of sugar, and China is the third largest producer and the first importer of sugar, events in these countries affect the sugar market. It is why it is important to keep a close eye to their governmental regulations, crises, weather and the Brazilian currency.

Authors : Hedi, Nicolas and Ricardo

Source :

USDA article : full of precious data

Maritime Piracy

The phenomenon of Piracy is as old as maritime trade and has threatened seafarers ever since. Being famous pirates of the Caribbean hunting Spanish galleys full of precious metals in the 16th century, today we observe modern 21st century piracy targeting merchant vessels on the busy trading routes. The following movie track introduces to the topic (click on the picture to launch).


The three main Conflict Areas


The three main conflict areas comprise:

  • Southeast Asia (SEA): Straight of Malacca & Singapore (SOMS), South China Sea (SCS)
  • Gulf of Guinea (Nigeria etc.)
  • Gulf of Aden / The Horn of Africa (Somalia) / Arabian Sea

It is important to differentiate between incidents of ‘piracy’ and ‘armed robberies against ships’. Piracy incident occurred on board ship on the high seas, while armed robberies against ships occur within a State’s internal waters, archipelagic waters and territorial sea.

In 2015, worldwide, 15 vessels were hijacked, 203 were boarded, and 1 fired upon. Almost 75% of reported incidents of Piracy & Armed Robbery happened in Southeast Asia.


Southeast Asia (SEA)

The Straights of Malacca and Singapore as a bottleneck in global trade represent a multitude of risk. Major quantities of strategic commodities pass through this area and the many surrounding islands favour the ease of attacks. A total of 200 incidents of piracy and armed robbery against ships (comprising 187 actual incidents and 13 attempted incidents) were reported to the ReCAAP ISC, the insert definition, in 2015. Of these, 11 were acts of piracy and 189 were incidents of armed robbery against ships. There has been an increase of 7% from 2014. Of the 200 incidents, 60% (120) incidents occurred on board ships while underway, and 40% (80) on board ships while at anchor/berth. More than 50% of the total number of incidents reported in 2015 occurred in the Straits of Malacca and Singapore (SOMS) on board ships while underway.

The map on the right illustrates the concentration around the SOMS and category of the incidents (Cat. 1 = Organized Perpetrators & Hijacking, Cat. 2 = Violent Robbery, Cat. 3/4 = Opportunistic Petty Thefts).


The Horn of Africa / Gulf of Aden / Arabian Sea

Attacks in the region around the Horn of Africa and the Gulf of Aden peaked in 2011 and significantly dropped in the past two years. Factors that deterred Somali pirates include the enforcement and collaboration of international navies, the equipping of vessels with self-defense systems, the use of private armed security teams, and the stabilizing influence of Somalia’s central government. The following Piracy map illustrates this trend:

Targeted Vessels & Cargoes

In 2015, main target are bulk carriers (86), product- (51) and chemical product tankers (11), container vessels (30), other tankers (20) and general cargo vessels (15). Opportunistic robbery mainly affects smaller and less fast vessels (handysize) where usually groups of 1-9 men carrying knives, guns & machetes are looking for stores, engine spares, cash and property of crew and vessel. In SEA, there are a lot of robberies at ports and anchorage. Organized criminal groups and networks also target bigger vessels. Being informed about cargo, destination and sailing route, common incidences include hijackings of product tankers for cargo theft. Using the method of ‘siphoning’, cargo us pumped over to other smaller ships and carried away. Examples are: chemicals, marine gas oil (MGO), marine fuel oil (MFO), marine diesel oil (MDO), diesel fuel. Cargo is then sold to local markets or sold to a network of buyers serving the black market. There also occur cases where the ships’ identities, documents and crew are changed and the whole ships steered to another port and the cargo sold (ex: metals and scrap metals in the South China Sea). In the peak years of Somalia’s piracy, hijackings often went in hand with ransom demand. The most famous of these happenings was even made into award-winning movie and broadcasted in the cinemas as ‘Captain Phillips’.

Underlying Problems & Motivations favouring Piracy & Armed Robbery

The presence and increase in piracy is attributed to a number of causes including: widespread poverty, political instabilities, organized criminal networks, over-fishing, poor maritime regulations, lack in law enforcements for international waters and politically motivated groups. The case of Somalia shows that in a first instance, fishermen would defend their fishing grounds from illegal foreign fishing vessels. However, when radical formations joined the playground, some of these fishermen that were left without work in the already shattered country would eventually be driven into piracy.

Implications for the Shipping Industry

Not only does piracy represent a threat to maritime transportation, it is also a highly destabilizing threat to the entire industry. Attacks are menacing global shipping markets at a time when the industry is already facing critical financial and economic challenges (as we have seen in our last bulletins). Insurance premiums multiply and the cost of re-routing vessels to avoid danger zones is estimated to be between $2 billion and $3 billion a year. In addition, in order to protect their vessels, ship owners spend between $300 million and $2.5 billion annually on security equipment and the hiring of private security crews (often mercenaries).

Closing Words

For the time being, this is the last in the series of our bulletins on Freight. We hope that we could provide you with interesting insights into the Maritime Shipping industry and the Freight market. In an interconnected world where local trade shifted to international trade, maritime transport plays an even more important role than ever. We would also take the opportunity to express our sincere thanks to Mr. Robert Piller who accompanied us almost fatherly through this major in Commodity Trading.

Further Reading

Somali pirate clampdown caused drop in global piracy

Live Piracy & Armed Robbery Reports by the International Maritime Bureau (ICC IMB)

Annual Report 2015 – Piracy and Armed Robbery against Ships in Asia (by ReCAAP)


© by Cyrill Kressibucher / Pascal Perrin


ICC INTERNATIONAL MARITIME BUREAU IMB, 2014, Somali pirate clampdown caused drop in global piracy, IMB reveals. [online]. 2014. [Accessed 23 May 2016]. Available from:
ICC INTERNATIONAL MARITIME BUREAU IMB, 2015, IMB Piracy & Armed Robbery Map 2015. [online]. 2015. [Accessed 23 May 2016]. Available from:
ICC INTERNATIONAL MARITIME BUREAU IMB, 2016a, IMB PRC (Piracy Reporting Centre). [online]. 2016. [Accessed 23 May 2016]. Available from:
ICC INTERNATIONAL MARITIME BUREAU IMB, 2016b, Annual Report 2015 – Piracy and Armed Robbery against Ships [online]. [Accessed 23 May 2016]. Available from:
ICC INTERNATIONAL MARITIME BUREAU IMB, 2016c, Live Piracy & Armed Robbery Report 2016. [online]. 2016. [Accessed 23 May 2016]. Available from:
INTERNATIONAL MARITIME ORGANIZATION IMO, 2016, Piracy and Armed Robbery against ships [online]. 2016. [Accessed 23 May 2016]. Available from:
NATO SHIPPING CENTRE, 2016, Piracy Alert Map. [online]. 2016. [Accessed 23 May 2016]. Available from:
RECAAP ISC, 2014, Annual Report 2014 – Piracy and Armed Robbery against Ships in Asia [online]. [Accessed 23 May 2016]. Available from:
RECAAP ISC, 2014, Special Report on Incidents of Siphoning of Fuel/Oil at Sea in Asia 2014 [online]. [Accessed 23 May 2016]. Available from:
RECAAP ISC, 2015a, Annual Report 2015 – Piracy and Armed Robbery against Ships in Asia [online]. [Accessed 23 May 2016]. Available from:
RECAAP ISC, 2015b, Piracy and Sea Robbery Conference 2015. In : [online]. 2015. [Accessed 23 May 2016]. Available from:
RECAAP ISC, 2016, ReCAAP ISC – DATABASE. [online]. 2016. [Accessed 23 May 2016]. Available from:
WORLD SHIPPING COUNCIL, 2016, Piracy. [online]. 2016. [Accessed 23 May 2016]. Available from:
YOUTUBE, 2013a, Captain Phillips – Official Trailer (HD) Tom Hanks – YouTube. [online]. 2013. [Accessed 23 May 2016]. Available from:
YOUTUBE, 2013b, CNBC :: Shippers Go Head to Head With Sea Pirates. [online]. 2013. [Accessed 23 May 2016]. Available from:


As mentioned in our previous bulletins, the country is in a bad economical shape due to the decrease of the world oil price and is no longer no1 in African crude oil exports.

The population is despaired to see the business of crude and the money it brings to the state not impacting their quality of life and destroying their environment, thus creating social tensions in the country. There are also been repetitive attacks on oil facilities in the Niger Delta that impacts the economy of the country.

Who are those attackers?

The first group is known as the MEND – Movement for the Emancipation of the Nigerian Delta – a militant group active since 2000. However this group is less active now due to an amnesty agreement with the government. MEND was looking for a more equitable share of the resources from the petroleum industry in the country. In order to do so they organized attacks on oil infrastructures and kidnap employees from the international oil firms.

Source: MEND – Veronique de Viguerie

Meeting the MEND:

The second group who emerged in February is the militant group Niger Delta Avengers (NDA). Their attacks this month targeted the Chevron Valve Platform and they are also suspected of criminal acts on the Eni and Exxon Mobil facilities on the 18th an 19th of May. According to publication on their official website they will carry on their attacks, until their demand are met.

On a post on May 11th entitled “Chevron don’t dare the Avengers”, they showed a clear determination to continue fighting for their cause:

“From our investigation Chevron Plc is about to carry out repair works at the Valve platform that was blown by us (Niger Delta Avengers). We made it clear that no repair works should be done until our demands are fully met. […] Chevron and Nigeria Government are pushing us to do against our belief. Despite making it clear we are not after innocent human lives but as it’s going we might cause human casualties if they don’t listen to us. Be informed that if we decide to strike it going to be bloody. And the contracting firm going to do the repair works we want you to know that your facilities and staff will be our first casualties.”

They claim they want to protect the “Nigerian Delta Interest”, but there is a lack of precision on what they exactly mean by that. Overall, the news report that NDA fights to protect the environment of the Delta which is destroyed by the oil industry, and require an equitable share of the revenues. On their website they state that “We are been oppressed and pushed to the wall on various front hence we (the Niger Delta Avengers) have picked up the challenge to be the worthy outlaws this government will have to contend until the daily production of oil is reduced to zero in the Niger Delta and let use the oil of the North to run the Nigeria’s mono-economy.”

The impact of attacks according to the Nigerian Vice-President represents a decrease of approximately 26% of daily production reaching 1.4 million bpd. The annual budget was based on an output of 2.2 million bdp, thus it can be expected a continuous major decline in the economy in the following months.

Brent spot price

On May 25th, 2016, the Brent spot price stood at 49.14$/b.

Regarding, our last bulletin on May 5th, 2016, the spot price was at 47.12$/b, thus increase in price by $2.02$/b within 20 days.

As illustrated on the graph, since around March 2016, the Brent spot price has gradually increased. (Upward trend but highly volatile)

Reasons: “Disruption in supply”

-          On May 16th, 2016, Militants attacks take Nigerian oil production to 1.4m b/d

-          Decline in the American Shale Oil production

-          Wildfire in Canada


March 2016

-       Nigeria’s Bonny light/Brent= +0.02$/b – premium (US influences – according to OPEC’s monthly report « arbitrage to the US, support African crude differentials.”)

-       Angola’s Girassol/ Brent= -0.10$/b – discounted

April 2016

-       Nigeria’s Bonny light/Brent= +0.03$/b – premium – (+$0.01/b changes)

-       Angola’s Girassol/ Brent= -0.23$/b – discounted even more

Supply and Demand

  • According to the IEA monthly report, global oil supplies rose 250 kb/d in April to 96.2 mb/d as higher OPEC output more than offset deepening non-OPEC declines. Also, OPEC crude output rose by 330 kb/d in April to 32.76 mb/d as a 300 kb/d jump in Iranian flows and a boost in Iraqi and UAE supplies more than offset outages in Kuwait and Nigeria. (Saudi output was steady near 10.2 mb/d. Iranian supply rose to 3.56 mb/d, a level last hit in November 2011 before sanctions were tightened.). Supply for non-OPEC is forecast to drop by 0.8 mb/d to 56.8 mb/d, throughtout 2016.

IEA stated that the “global oil demand growth for 1Q16 was revised upwards to 1.4 mb/d, led higher by strong gains in India, China and, more surprisingly, Russia. For the year as a whole, growth will be around 1.2 mb/d, with demand reaching 95.9 mb/d.

Future Contract

The global oversupply of crude oil is still represented by the Contango curve and the relatively low prices. The basis from $0.99 to $0.6 per barrel, according to our last bulletin on 12.04.2016, thus it continues to weaken. To finish, prices tend to stabilize around $53 per barrel for next year contracts.


Investors have to evaluate well the country-risk factor as there is a lack of security in this region and no improvement is expected for the moment.


Tanya Cole, Chantal Gasser, Nicolas Schenkel


Bloomberg (2016). Brent spot price [online]. [Consulted on :25.05.2016]. Available at:

Crude Oil Future price [online] Barchart. [Consulted on :12.04.2016]. Available at :*

Security issues: ROSS K., Nigeria Delta militants. Available at:

CNBC, 2016. “Niger Delta Avengers”: who they are, and what they want [online]. 20.05.2016. [Consulted on: 26.05.2016]. Available at:

NIGER DELTA AVENGERS, 2016. Official website [online]. [Consulted on: 26.05.2016]. Available at:

ROMANDIE, 2016. Le Nigéria renforce la sécurité autour des installations pétrolières [online]. Romandie. 21.05.2016 [Consulted on: 26.05.2016]. Available at:

ROMANDIE, 2016. Les ex rebelles du MEND dénoncent les attaques d’installations pétrolières au Nigéria [online]. Romandie. 22.05.2016 [Consulted on: 26.05.2016]. Available at:

SAHARA REPORTERS, 2016. NigerDelta Avengers blowup Chevron Platform in Delta state [online]. Sahara Reporters. [Consulted on: 26.05.2016]. Available at:

VERONIQUE DE VIGUERIE, 2016. The oil war, Niger Delta [online]. [Consulted on: 26.05.2016]. Available at:

ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES, 2016. Monthly Oil Market report [online]. OPEC. 13.05.2016. [Consulted on: 25.05.2016]. Available at:

IEA, 2016. Medium-term oil market report 2016– Overview [online]. IEA. [Consulted on: 25.04.2016]. Available at:


Krasnye Barrikady a Russian shipbuilder won a contract of 1 billion US dollar by Iran to build five offshore drilling rigs for use on Iran’s part of the Gulf shelf, according to Reuters.

To note that Iran will soon make a 15% advance payment on the amount of USD 200 which is the price of the first rig.

“The battle for China’s Oil market”

Russian crude oil exports are still going well with China. In April and for the second month of the year 2016 Russia is the largest crude oil supplier of China and so surpassed Saudi Arabia.

Russian crude oil exports had just reached a peak at 1.17 million barrels per day, surpassing the previous record of 1.13 million barrels per day in December 2015. In comparison, China imported 1.0 million barrels per day from Saudi Arabia in April 2016 and 936,500 barrels per day in Mach 2016.

Russian Urals oil : ready to be the next oil benchmark ?

The urals oil is a mix of heavy and high-grade oil of Urals (name of an area in Russia) with light oil of Western Siberia.

Russia has always wanted to put the urals as an independant benchmark.

Even though, Russian government tries to launch since years the urals future contract under the name  REBCO on the NYMEX last 2008: not a single trade was made.

Currently, Urals is sold outside the exchange, mainly through direct long-term delivery contracts. This means that only the counterparts of these transactions know the price of the commodity.

This month, Chinese companies would be interested in Russian Urals blend crude futures trading and also in using the quote for determining the price of long-term oil contracts.

These facts have been confirmed by the Vice President of St. Petersburg Exchange (SPIMEX) :Mikhail Temnichenko and he added that a « bidding mechanism is scheduled to begin in November. »

Crude oil production worldwide

As you can notice on the graph below, the three major crude oil producer in 2016 are Russia, which leads the list, followed by Saudi Arabia and the United States. Those data show us also the highest and lowest production of barrel per day since 1992.

Indonesia – a new investment for Russia?

In fact, Indonesian economic growth reached almost 5% in 2015 and their oil production is more or less 830’000 barrels per day. As Russia is developing their pipeline to the east in direction of Asian countries, they could invest in Indonesia as well as the consumption of crude oil is twice their production so they need to import to smooth the imbalance in the country.

Last week, both presidents of Russia and Indonesia agreed to set up a bilateral cooperation. Let’s have look in the future how this market grows.

Armend Qestaj, Ian Williamson, Mayween Henchoz


Forward curve

Nothing much new about the forward curve, it is still showing a carry, meaning that the market is bearish.


Regarding weather, most areas of Minnesota are now hoping for “a good soaking rain”. Good news is that not only rain but also storms are forecasted for next week though Sunday.


Here are few articles screenshots about corn planting to keep up with last bulletin news about planting being ahead of schedule:




South Dakota



News around the globe

Coldest Mid-May over the last 25 years in the Corn Belt

As the weather reports announced it has been the coldest Mid May over the last 25 years in the Corn Belt, the main corn producing area of United States. The Corn Belt mainly includes parts from the North Central and Eastern States of Minnesota, Dakota, Nebraska, Kansas, Missouri, Ohio, Michigan, Indiana, Illinois and Kentucky. The Corn Belt produces almost 70 % of US corn production.


In the next graph we can see how much the temperature changed from the average mid-May temperature:

All the states of the Corn Belt were affected but those affected massively were Minnesota and Iowa. That was probably one of the reasons except the rising demand for corn that the USDA revealed for the increase in the price of corn in the May.


Hopefully, according to USDA’s weekly crop progress report for Minnesota, 65% of the corn crop is in good to excellent condition despite the frost.



Ukrainian GM Corn

“10 % of Ukraine Corn will be grown this year from a genetically modified seed” the USDA said. Ukraine is a major exporter of corn to buyers including China, which has strict controls over imports of genetically modified crops, and shown a willingness to enforce them. Chinese trade data on Monday showed that of 1.16m tones of corn the country imported last month, 1.01m tones came from Ukraine.

Some commentators believe that Ukraine corn shipments are escaping Chinese sanction either through a lack of testing or their contamination with genetically modified varieties which Beijing has approved for import.



China to auction total of 2.2mn t of state corn, rice on Friday

As we said in our previous bulletin, China’s government plans to reduce its corn stockpiling. The government has decided to auction this week 2.2 million tons of corn including domestic corn from 2012 and imported corn from 2011-2012.

“The corn would be sold in a price of 1,300-1,450 Yuan (USD 198-221), per tonne, based evidently on the quality of the grain.”  Currently, the corn price on the Dalian Commodity Exchange is trading around 1,550 Yuan per tonne. The purpose is to liquidate as quickly as possible their gigantic stocks. Nevertheless, China imported seven times more volume in April 2016 compared to the same month a year ago.

Furthermore, the forecast for 2016 shows us that corn production will decrease by 2.9% due to farmers who are altering with another crop.




Brazil is suffering an enormous dryness in the main producer states, which are Mato Grosso, Goias and Minas Gerais. These 3 main producers represent almost 50% of the total production, which is threatened. Indeed, the production losses may exceed more than 3 million tons in Mato Grosso State.

Thus, the real strengthened against the dollar (4,15 dollars in January to 3,58 on Tuesday).

The main winner of these events is Argentina. Argentina may overtake Brazil export this year knowing that the price of Argentina corn at port was 10$ cheaper than US Golf according to analyst Aedson Pereira.



If you are a big fan of meat and grilled corn, thus you have not organised a trip yet, you should travel to USA, because beef price will decrease for 2% thanks to the bargain corn price.




Our recommendation is to be short knowing that the US Agriculture Department forecasts that US corn output will surpass 360 million tones. The best harvest for 10 years.



Joanna Dupont, Konstantinos Angelakis & David Pereira




United States Department of Agriculture is saying that the 2016/2017 U.S rice crop is projected at 231 million cwt (20 cwt = 1MT so 231 million cwt = 11.55 million MT), which represents an increase of 20% from a year earlier.

It seems that the use of rice crop will bring an increase in term of exports. In fact just to have an idea in 2016 the northeastern Arkansas county which one of the top three rice-producing counties in the state says that the weather has been so favorable for so many rice growers that planting progress has leapt ahead of the five-year average established by the USDA for mid-May, and several counties are now expecting more acreage to be dedicated to rice than growers originally declared in the early spring.

“Last year, we had around 89,000 acres of rice, and I think this year we’ll be over 100,000,” Ginn said. “We’ll be up more than 10 percent is my guesstimate. I am seeing a lot of rice.”

On the other side if we look at the global rice production in 2016/17 we have a projection of 480.7 millions tons but global rice trade is projected to decline for that time. What is the reason of that? India, Thailand or Vietnam are exporting less rice due to bad weather conditions.

In contrast we have the US and even Argentina or Australia that are expected to increase their exports of rice. Result of that situation global trading has slightly increased over the past month. The same demand and less supply have impacted the price.

Situation in Vietnam

Vietnam and other country in the region had to face an important drought that killed Vietnam rice crops. In fact, The Mekong River countries of Vietnam, Thailand, Laos, Cambodia and Myanmar produce about 62 million metric tons of rice, or 13 percent of global output. And this river accounts for as much as 25% of the global freshwater catch and provides livelihoods for at least 60 millions people.

“Rice exports from Vietnam, the world’s third-largest shipper, probably will drop 10 percent this year because of lower production, said Do Ha Nam, the chief executive officer of Intimex Group, a major Vietnam exporter of agricultural products.”

Taking into consideration that approximatively 10% of the global production is traded which represent 48’000’000’ MT for the year 2016/17 and that the total exportation of Vietnam was 7’000’000 MT in 2015/16 accoding our last bulletin. The drop of 10% will represents 700’000 MT, which is 1,4 % of the global rice trade. Concerning the US export, the USDA project an export of 3’600’000 MT which represent an increase of 350’000 MT, and 0,7% of the total exportation.

On the next graph you can see how Vietnam’s rice exports has declined in the last few years due to these parched crops.

The major problem is that Vietnamese and others Asian countries have to produce enough rice to nourish their population, is a question of food security.

So we guess this will create tension between the quantity that they use to export and the quantity that they use to consume, they will be for sure more focused on their own rice consumption before thinking about what export.

Can the extra production of US and other new rice producer countries compensate the loose of Asian Countries?

Our suppositions are US will not produce yet as much as Asia produce but the main rice production can delocalize to America if the climate continue to create choc. And knowing that US is a key player on the rice trading should the traders make prediction of the oversupply in the US or of the decrease production in Asia?

What about the price?

So as we’ve said before prices are expected to increase by the fact that supply is getting smaller from country such as India, Vietnam and Thailand but demand is still maintaining the same level.  In contrast, U.S rice crops are projected to have an important increase of 20% on their production. Is there an opportunity to make some money if we catch the trend?

Here you can see how rice price has been moving for the last months. There is an increase of 6.5% from DEC-2015 to APR-2016.

Huge strike in France

France is facing important strikes that directly impact the gasoline and diesel market. The government forced the implementation of the El-Khomri labor law, resulting in an impressive revolt. Strikes occur at the entry of refinery sites and those refineries are blocked meaning that plenty of gas stations are running out of stocks. French police is currently trying to open and secure the way to the refineries.

Moreover, Total’s CEO is considering to reduce its investment in France. 5 Total’s refineries are currently partially or not working due to the strike.

Finally, it seems that some prices at the pump has increased by almost 10% in certain area.

The issue is so important that the French government must use its own reserve to provide energy to the citizens.

Here is a map of the gas station currently completely or partially running out of stocks:

USA Political Link

Gasoline price does not only defines if people use a lot or not their cars. A study conducted by Moody’s shows that the price of gasoline impact the result of the US election. The price being today around $2.3 per gallon seems to be in favor of the democrat. However, according to their study if the price reaches $3.00 per gallon we could see a shift from a victory of the democrats to the republicans.

Chinese emissions program

The Chinese capital, Beijing, is going to implement new rules in a way to reduce the vehicle emission by 5%. This strict rule will allow the city to reduce its emission by 20 to 30% by 2022. This program is as well expecting a change in the fuel quality, which could lead to an increase in the gasoline price.

Demand and supply


Even though we have seen the highest demand for gasoline in the US during the beginning of this year, we can still see the increase of the level of tank storage. This comes from the important increase in the import of gasoline. Compare to the year 2015, the import of gasoline has double in terms of barrels per day passing from approximately 450 thousand to 900’000.The increase of import comes mostly from the low price of crude which creates very low margins for refineries.


The second biggest country of the world has today reached the first place in the growth market for oil. Since the beginning of the year 200 million cars have been launched on the indian market. India today consume more than 4 million of oil barrels. They have now overpassed japan as the 3rd oil consumer of oil and its derivatives.

Prices and forward curves

We can see that the forward curves as remained constant. However, it has been said that we have moved from a backwardation to a contango for the Gasoline, which is not clearly shown here.

In terms of prices, both commodities continues their increases from the start of the year, mostly due to the correlation with the oil price. Even though diesel demand is decreasing, price tend to grow as some refineries stop or reduce their production of diesel to produce more gasoline.


Since the beginning of the year, both commodities were very volatile and remained interesting commodities for trading houses. We could say that there were no uncertainty related to the futures markets. Moreover, many changes happened or could happen, such as countries deciding to import while others stop importing but started exporting. New strategies in terms of commodities transportation are coming and new regulations in terms of CO2 emissions and taxes could be set which are linked with VW scandal . For those points there are still uncertainties that could help the market to remain volatile. Finally, we could assist to a change of ULSD sulfur standard for the forward market.

Antoine Girard

Alexandre Gay

Saniya Al Turabi