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Aluminum Futures Historical Prices


In our first bulletin, aluminium prices had increased significantly to skyrocket at 2,644 USD/t at the beginning of April when the initial sanctions were put into place. In comparison to our last bulletins, aluminium prices have slightly increased reaching (2.333,25 USD/t, as of 16thMay). The reasons for this increase after the sanctions were postponed to October is the reverse cancellations of orders at the Malaysian port of Port Klang earlier this week. The LME registered back 138’650 tonnes at the same location. The level of price is trying to find its mark since the report of the US sanctions against Russian companies to the 23rdOctober 2018.

Forward Curve Primary Aluminum LME

Bloomberg (2018) Bloomberg Professional [Online]. Available at: Subscription Service (Accessed: 16th March 2018)

Like our second bulletin, the forward curve for aluminium as of the 16th Mai on the LME begin by a backwardation between around 06/2018 to 09/2021. The market is in backwardation because traders expect to experience an overproduction outside the United-States. This overproduction is due to the sanction against Rusal and the US threats of tariffs that might touch the EU in June 2018. Then it changes into a supercontango beginning 2022. We still have an artificial physical shortage as trader keep the metal in their warehouses. Traders are long physical and short future. Their goal is to take advantage of the supercontango.

Forward curve

Source: lme


The impact of the US sanctions over the companies are not measurable yet. Rusal experienced an excellent year in 2017 and its result for the first quarter of 2018 (total revenue of 2.744 billion US dollars) is comparable with the trend of 2017. The aluminium company released its first quarter result last week. The company has performed truly well with an increase of 20.4 % of its adjusted EBITDA in comparison with the overall 2017. The revenue linked to the sale of primary aluminium went up of 16.9% for the first quarter of 2018.   Nevertheless, it is true that Rusal performed slightly better during the last quarter of 2017. The US sanction hit the company truly recently and thus has had almost no impact on the P&L of the Russian company yet. Indeed, the US sanctioned the Russian company only the last week of the first quarter. During the release of its results, Rusal has tried to calm its stakeholder and the market about the impact of the US sanction and has guaranteed that the company will respect its commitment regarding its creditors, shareholders and investors. Nevertheless, Rusal admitted that at the moment nobody can measure how badly the business will be touched in the long-run.

The stock market’s reactions represents well the situation. Rusal’s share on the Hod Kong exchange has lost about 65% of its value at the announcement of the initial sanctions. Not surprisingly, the shares of Rio Tinto, the oil producer seconding Rusal in terms of production, has seen its share increasing. The share price of Rusal is floating around 2.00 HKD and we do not see it regaining strength in the upcoming future as no solution to the sanctions has been found yet, and the company has just received some breathing space.

Source: Bloomberg

Source: Bloomberg

TRUMP VS Tusk and all his European friends

On Wednesday 16thof May, there was a European summit in Sofia where all the main leaders of European countries met. During that summit, the different leaders wanted to show their unity regarding the threat of the American tariffs for the aluminium and steel. The European Union is exempted of the tariffs until the 1stJune 2018. The Union also discussed extensively about their willingness to respect their commitments with Iran and the nuclear deal.

Tusk during the summit:

“The EU and U.S. are friends and partners. Therefore U.S. tariffs cannot be justified on the basis of national security. It is absurd to even think that the EU could be a threat to the United States.” EU willing to discuss cutting trade barriers with U.S.: MerkelIn bitter comments, Tusk said Trump has rid Europe of “all illusions” with the trade dispute and by pulling out of an international nuclear deal with Iran.

“Looking at the latest decisions of President Trump someone could even think: with friends like that who needs enemies. But frankly speaking, Europe should be grateful to President Trump. Because thanks to him we have got rid of all illusions. He has made us realise that if you need a helping hand, you will find one at the end of your arm,”



Price Movement – Supply & Demand dynamic

Price: US Dollar

Unit: Ton

Price : 6’822 USD/Ton (15.05.18)

Last bulletin’s price : 6’960 USD/Ton (25.04.18)

Since the last bulletin, the spot price of copper on the LME fell from 6’960 USD/Ton to 6’822. In-between, the price hitted its lowest level in a month on the 8th May.

This overall decrease is mainly due to a strong US dollar, which reached its highest level of 2018. This make dollar-quoted commodities such as copper more expensive for non-US companies. It has a rather negative effect on the demand side.

Between the 8th and the 10th May, LME copper spot prices rose because of a decrease in the inventories of LME-registered warehouses (a drop of 7’950 tonnes) and also because of signs of strong demand from China, which accounts for nearly half of global copper demand. Indeed, in April, China imported 442’000 tonnes of copper according to customs data. This is the highest monthly total so far in 2018.

Forward Curve

Futures contract’s price (LME)

Unit : USD/Ton

Contract size : 25 Tons

Situation : Contango (Supply > Demand / the producer will carry storage costs)

The forward curve says us that we are in presence of a bearish market which is well supplied.

Trade News

The plant of Vedanta’s Indian copper smelter has been shut since 27th March and will remain shut until at least June. It was initially closed for a 15 days scheduled maintenance as the Tamil Nadu pollution board rejected its license for flouting local environmental laws. This is one of the biggest copper smelter in India which can produce 400’000 tonnes of copper cathode per year.

Chile copper mine Sierra Gorda, controlled by KGHM closes temporarily following an accident on tuesday. The firm decided to shut down operations following the death of an employee during routine maintenance work. This mine produced 101’700 tonnes of copper in 2017


In this bulletin, we will focus on a relatively new player in physical Natural Gas trading : a hedge fund. This must come as a response to the more and more difficult times traditional commodities hedge fund managers are having to make money. They agree that trading has become “tougher compared with when fundamental information was harder to find”. Information is key to trading.

Source: CAIS 2017 – Alternative Investors Congregate in the Cayman Islands – Mark Clannachan

The Hedge fund Citadel is becoming a big player in the natural gas market. Last year the company traded “more than a month of US residential demand” according to Financial Times, which is three to fours times more than the previous year. So we checked the numbers found out that their business is developing good.
Given the difficulties of a physical deal, hedge funds are normally only “paper” traders. Citadel chose to trade on the physical market since 2002. The hedge fund had established a physical business for Natural Gas in 2014 by buying and selling gas in North American pipelines. Obviously, the market is very volatile which creates some opportunities.

By comparison with the other players in the gas market, Citadel purchased 475.1bn cu ft and sold 456.3bn cu ft in the US in 2017. This makes the company be equivalent in terms of volume to the big trading companies, such as Vitol.

(1 MMBTU = 1 million British Thermal Units = 1’000 cubic feet = 28.263682 m3 of natural gas at 1°F)

Remember: 1 bn cu ft = 1’000’000’000 cu ft of natural gas ≈ 1’000’000 MMBTU, so if you purchase 475,1 million MMBTU at 3 USD per MMBTU, you have to pay 1’425,3 million USD.

Indeed, the natural gas is becoming the commodity to trade. Everyone wants its share of the pie. Between the countries emission reduction target and the 2020 shipping regulation, the natural gas is a great alternative to other energies as it is less harmful to the environment.

This means hedge funds are to be taken as serious concurrents and this will decrease margins for traditional commodity traders, because hedge funds are more diversified and have more leverage on the risk. “Hedge” funds…

Our personal recommendation : times are getting harder, we might just as well have a nice BBQ before tackling this issue !


Forward curve

US cent per barrel

The forward curve is in backwardation mainly due to fears of the market participant about tension and the possible military action that could take place between Iran and Saudi Arabia. An expansion of the hostilities could impact oil supply. “Hence, the spot and near-term futures prices for oil reflect a heightened Mideast Risk Premium” if the US negotiates a new deal with Iran, the spot price might decrease and the backwardation disappear.


US production

US oil production further increasing (up to 144’000 bpd in June), this might pose problems on infrastructure as it is not made for that large amounts of oil transportation. To deal with this issue, new pipelines are built urgently. This is largely encouraged by the producers as they are afraid of heavy discounts due to the increased price of transportation. However, there were already major discounts to be seen in the West-Texas area caused by issues with transportation (last week, discounts of almost 16 USD per barrel were traded in Texas (to grade of Houston)). The transportation cost of rail is estimated at around 6 to 8 USD per barrel, which theoretically would leave trader up to 10 USD profit when shipped to Houston. This is very likely to increase the demand of transportation (might increase prices for rail and road transports).

US and Iran

12 May 2018: the US announced their withdrawal of the Iran nuclear deal, first, the WTI price decreased but since then, it is increasing again.

Some analysts from the CME group think that at the beginning, the supply of oil from the US might not change too much. The oil price of Iran may decrease, even if the production continues at its highest level and the producers will have to find new buyers and sell with a discount (Iran is the 3rd largest producer in the OPEC).

China is a big importer of US crude oil. In January 2018, the value reached 15’734 thousand barrels and in February 2018, 17’034 thousand barrels. China might start purchasing Iranian oil with discount prices. If so, the US exports to China will decrease and Chinese influence in the region will increase. Russia and Saudi Arabia may also start to producing again at its highest (they limited the oil production due to the low prices) and these two regions are closer to China, which implies a possible increase in imports from multiple countries but not the US. The increase in prices may be explained by the risk of military conflict in the Mideast, where Iran and Saudi Arabia could be involved. And for the US consumers, they might see the price of gasoline increasing.

Historical price WTI

US cent per barrel

Blockchain & Oil

A consortium has been developing a blockchain-based platform for physical oil trades that started last year, including oil producers and traders BP, Royal Dutch Shell and Statoil ASA, commodity traders Gunvor Group Ltd., Mercuria and Koch Supply & Trading, with the commodity trade finance: ING Groep NV, ABN Amro Bank NV and Société Générale SA. Thus, big companies are working and creating their private blockchain platform which is specialised to oil transactions.

They have already tested the system on a tanker of crude oil which has been sold to China National Chemical Corp., the goods have been sold three times before the physical shipment discharge, verifying the transaction took about 25 minutes whereas is normally takes around 3 hours. Mercuria said: the process eliminated the rise of routine errors that take even more time to sort out.



Brazilian soybean have been quoted in China at a $94 premium a tonne over July Chicago futures. In comparison, it reached in April a $160 premium, after the threat to set a tariff on US cargoes. Usually, the premium reaches about $50-60 a tonne at this period of the year.

The price for Brazilian soybean is expected to drop as the government has announced all-time record harvest of more than 119 million tonnes. Moreover, the current high price for Brazilian soybean has slowed down the Chinese demand. However, some traders declared that Chinese importers have booked 20 cargoes for a delivery in August last week.

Céleres, which is active in consultancy in Brazil, estimates that overseas sales of soybean will increase by 2 million tonnes in 2018, to reach an annual total exports of 72 million tonnes.

Price in USD/bushel

Pork’s demand is declining in China

According to Reuters, China will reduce its soybean imports for the first time in 15 years in 2018/19. The agriculture ministry has indeed noticed a dropping demand for hog which lead to a decreasing demand for animal feed. Hog prices in China registered one of the sharpest ever declines in the first quarter and are below average production cost. China’s April soybean imports fell to 6.9 million tonnes, a decline of 13.7% from a year ago.

“Most soybean plants in China are now overstocked with meal and oil,” said a trader in Beijing.

Forward curve – price per contrat (100 short tons (~91 metric tons))

The forward curve has changed compared to our last bulletin. The inversed shape from August to November has turned into a carry. It can be explained by the all-time record harvest of soybean in Brazil announced by the South American country government. It obviously increases the supply so the market has to carry the storage costs of soybean producers.

Crush spread (in cents per bushel)

The crush spread shows us how much money we can earn by crushing soybeans into soybean meal and soybean oil. The crush spread has these days reached its higher point since 2013. This represents a bullish factor for the price of oilseed. This changes affect also companies like Bunge, its stock has raised from $63.87 per share in November 2017 to over the $70 level. The same move has happened to ADM stock, from lows of $38.59 in November 2017 to around the $44 level.

Moreover, Bunge’s CEO and ADM’s CFO said that the severe drought in Argentina causes this increasing crushing margin and that their companies were profiting from it since they own many crushing plants.


  • ADM recently bought a grain elevator in Manilla in Iowa.  This purchase increase the storage capacity of the company by 2.3 million bushels, whose represents 1.5 m of bunker storage and 775.000 of upright storage. The infrastructure can also receive 32.000 bushels of soybean per hour.
  • Some delays are occurring in China on discharging vessels and soybean are stored on a longer term basis until tests for GM material are concluded. China government keeps reporting finding seed-treated soybeans in shipments, but have not stopped trade due to this presence thus far. It could affect soybean imports if the government decided to react and set up some severe regulations on GM products.
  • The Taiwanese Food and Drug Administration is currently drafting implementation regulations on a law set in 2014 on GMO food labelling. It impacts all soy products except soybean oil. This decision could slow down the demand for bulk soybeans coming from United States.
  • In Japan, the U.S. soybean industry has seen trade perturbations due to detections of chemical residues that exceed the country’s tolerances. As U.S. soybean farmers use new herbicide mixes to eliminate weeds, there is a need to monitor those chemicals and the maximum residue level policies in export markets.


HSBC has made their first trade finance transaction integrating blockchain technology. This trade was conducted for a cargo of soybeans shipped from Argentina to Malaysia, involving Cargill Geneva, ING, and HSBC themselves, using a Corda blockchain developed by the R3 consortium.

HSBC’s global head of innovation, Vivek Ramachandran, said that “the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.” He added that it is an inflection point for how trade is conducted.

The trade, instead of usually taking five to ten days for the exchange of all the documents, has here been made in only 24 hours. Moreover, HSBC said that they consider that blockchain could help reducing costs by 31%.

Video – HSBC’s blockchain engagement


Forward Curve

The forward curve is still in backwardation, like last time.

The Dalian Commodity Exchange opens its doors to foreign investors

On Friday 4th May 2018, China’s Dalian Commodity Exchange for iron ore futures opened for foreign investors and international companies. Which makes iron ore the second commodity open to overseas’ traders after crude oil futures. The DEC was previously opened only to Chinese registered company, which obliged foreign entities to trade on the DCE via Chinese entities and local businesses. This strategy of opening the iron ore futures for foreign investors comes from the fact that iron ore pricing takes its signal and starts from China. China is the place where prices for this particular commodity is dictating the path for physical market. Unlike oil, gold or copper where prices are set in London and New York.

According to Micky Richmond, trader from Trafigura, the big miners trading on the Dalian Futures Exchange will boost China’s bid and could lead the country to be a global pricing centre. Furthermore, more global players in the Dalian Commodity Exchange for iron ore futures contracts will lead to more efficient pricing and increase liquidity in the market (more volatility). In addition, the Singapore Exchange become a competitor of the DCE and this move will boost arbitrage opportunity in pricing as well between the to market exchange. Therefore, international companies will be able to take advantage of price variation across the two exchanges. Even though prices will be affected by speculative trading and volatility in the market, miners such as Vale, Rio Tinto, BHP Billion or Fortescue do not hedge nor fix the price for future sales because they would see their earnings lowered if prices increase. That’s why they rather use swaps to protect themselves from a decrease in prices and could take the most of prices going up.
More players in the market lead to a small price appreciation (from 64$/MT to 66$/MT).

What does it mean for European (Swiss) traders ?

We are talking here about China opening its iron ore market. China being the importer from 50% of the world iron ore. China mostly deals with big producers (Rio Tinto, BHP Billiton, Fortescue Metal Group, Vale,…). Small traders (like ones in Geneva), prefer to focus on niche markets (Russian, South African, …).

Pressure of steelmakers on Iron ore demand

The downstream demand is still very high due to the construction industry rushing to work as much as possible before the rainy season, which starts in June. However, this pression will not create seasonality on the commodity because the steel industry supplies various sectors such as construction, cars, household appliance, therefore one sector cannot create any seasonality over the steel industry.


WTI Futures and US crude oil stockpiles

This graph is showing the relationship between the WTI Futures and the US Crude stockpiles


This graph shows the evolution of WTI prices from 2014 to 2018  and the increase in price in 2018 considering the geopolitical landscape for oil producing countries from sanctions on Russia,Sanctions on Iran, trade wars and the OPEC/Russian alliance to cut oil production and its impact on the oil prices for the benchmark.


Russian Urals crude sunk to its lowest price in more than seven years on May 1, trading at a discount of $3.95 a barrel to its benchmark. Caspian CPC on May 2 sank to $2.90 a barrel less than the benchmark, the largest discount since June 2012. Loadings of CPC are scheduled to be 1.32 million barrels a day this month, near the highest on record.

Offline refinery capacity in Russia is set to drop to 556,000 barrels a day this month, down from 763,000 in April, which was the highest for the year, according to data from the Russian Energy Ministry. In Europe, planned refinery outages are set to drop to 54,000 barrels a day in July, from 1.16 million this month, Energy Aspects said in a late-April report.

U.S. crude exports climbed to 2.331 million barrels a day — the highest on record — in the week ending April 20 and remained high the following week, data from the U.S. Department of Energy show. As the U.S. pumps more oil than ever before, WTI discount to global benchmark Brent has deepened, spurring shipments to Europe this month, according to traders.


Reuters – March 16th 2018 – Trafigura set to boost its dominance in Urals

Trafigura is expected to increase its dominance in Rosneft’s Urals Oil trading as Rosneft’s 5 year pre-finance agreement with Vitol and Glencore expires.

In 2013, Rosneft entered into long term contracts with Glencore and Vitol for a serie of transactions with price set at Rosneft’s Tenders. The supply volumes contracted to Glencore were set to up to 46.9 million tons and up to 20.1 million tons for Vitol.

Before supplies, Rosneft was promised to receive a pre-payment of up to $ 10 billion for corporate investment purposes. The contracts guaranteed Vitol and Glencore predictable supplies based on tenders pricing and Rosneft pre-payments usable strategic goals as well as as to support the development of Rosneft’s resources.

The end of the prepayment deals with Vitol will remove Vitol, once the biggest buyer of Rosneft’s crude oil from the list of regular buyers while making Trafigura the biggest market player in the Baltic region, as as from April 2018, Rosneft will have around 700’000 tonnes or seven cargoes a month available for sale which will most probably go to Trafigura. Glencore will remain an important buyer of Rosneft crude oil as it became as shareholder in the company.

Source: Olga Yagova, Dmitry Zhdannikov, Gleb Gorodyankin. (2018, March 16). Exclusive: Trafigura set to boost its dominance in Urals. Reuters. Retrieved from

Rosneft Signs Long-Term Contracts with Glencore and Vitol. (2013, March 7). Retrieved May 10, 2018, from

Bloomberg – May 4th 2018 – Qatar Steps in to Buy Rosneft Stake After China Deal Collapses

In October 2017, a deal was made between the sellers – a consortium between Quarter Investment Authority(QIA) and Swiss mining giant Glencore – to sell a 9 billion stake of Rosneft to Chinese energy company, CEFC energy co. The stake was acquired in December 2016 to support Russian government to meet a target for privatization proceeds.

However, QIA and Glencore has announced to CEFC, their intention not to continue with the original deal. One of the reason mentioned was CEFC indebtedness. The sudden change of strategy, will now allow QIA to become the 3rd largest shareholders after Russian state (50 % of shares) and U.K. biggest trading company , BP Plc which owns 19.75%.

After the dissolution of the Glencore-QIA venture, Glencore will remain with 0.6% share and maintain a deal to purchase 220,000 barrels a day of crude from Rosneft. In return, QIA will pay Glencore about 3.7 billion euros for the acquisition of its shares. The cash will then be used to reimbursed loan it takes to acquire original stake.

Rosneft produces more oil than any other publicly traded company in the world, about 4.5 million barrels of crude a day. Though, the company loses the opportunity of having a Chinese company as major shareholders, China will continue to remain a strategic market for Russian largest oil producer.

Source: Qatar Steps In to Buy Rosneft Stake After China Deal Collapses. (2018, May 4). Bloomberg.Com. Retrieved from

BP Magazine – June 1st  2017 - The energy giant: why Russia matters

Here what an interview with BP Russia president David Campbell reveals:

  1. The cost of finding and developing the oil is very low

  2. Russia sits geographically between Asia and Europe – two great gas and oil markets

  3. Russia is a huge gas player, which suits BP’s strategy

  4. BP’s 2016 results show that:

    • 1/3 of its production comes from Russia

    • almost 1/2 half of its reserves bookings are from Rosneft

BP’s business in Russia

  • 2nd largest shareholder in Rosneft

BP has two seats on the main Board of Directors. This give the U.K oil giant a unique position in Russia in comparison to its competitors.

  • Investment in certain assets through joint ventures with Rosneft to grow a material business as well as creating opportunities.

- The consortium purchased Taas-Yuryakh Neftegazodobycha company operating the Srednebotuobinskoye field to increase production from around 20,000 barrels a day up to 100,000 barrels.

- It also created an exploration joint venture, Yermak Neftegaz, to explore an enormous area that is largely unexplored in the northwest and northeast of west Siberia, one of the great basins in the world.

- Technical collaboration where both businesses can bring in their technical experts to learn from one another.

- Technology co-operation and Project Cheetah (a partnership between BP, Rosneft and Schlumberger on seismic research and development).

Challenges of working in Russia

- Political challenge: The international sanction on Russia.

BP is used to operate within sanction regimes but it always to try to make sure their work is compliant.

- Geographical challenges :Russia is vast country which makes logistic complex and there are specific environmental conditions, such as permafrost.

Sources: The energy giant: why Russia matters | Locations | BP Magazine | BP. (2017, January 6). Retrieved May 10, 2018, from

Financial Times – 10 to 20 years OPEC and Russia Alliance

Opec and Russia are considering a 10-20 years oil alliance. This is aimed at stabilising the oil prices by engaging in production cuts over the years. The crowned prince Mohammed bin Salman of Saudi Arabia said that Russia and Opec are considering a long term oil alliance to keep prices in check  and stabilise them.

Oil Price – March 21st 2018 - Vitol Changes Strategy

The world’s largest independent oil trader, Vitol, is looking to secure long-term deals with some of the biggest oil-producing countries in the Middle East, in what has become a challenging wider oil-trading market.

Vitol is in discussions to seal either joint venture, or long-term offtake and supply agreements with Abu Dhabi, Bahrain, and Kuwait, Ian Taylor, who stepped down as CEO last week to become chairman at the oil trading group, told Bloomberg in an interview on the sidelines of the FT Global Commodities Summit in Lausanne, Switzerland.

Platts –  March 20th 2018 – Russia gearing up for wider use of blockchain in energy sector

The Russian  energy sector is hoping for new legislation to facilitate the use of blockchain technology as well as smart contracts in the trading of, among others, crude oil. Blockchain technology will allow crude oil producers to cut their operational costs by 3 to 5% as well as allow greater security in a country which is highly dependent on producing and exporting hydrocarbons. Russia’s fourth largest crude producer Gazprom  has already tested blockchain technology combined with other technologies in its logistics processes allowing it to follow its shipments and deliveries.

Rosneft’s revenues and EBITDA per barrel of oil output, USD per  barrel of oil (boe)


We can see that from our last bulletin price have rose by almost 4 $ this increase can be explained by the anticipation of the market to the scarcity of the cotton commodity. Linked to the future increase of the seeds price in India. The new set of rules according the use of water.

Lack of Water:

Another element is the destruction of crops by the issue of water shortage is also to take into account. Indeed, in the regions of Sindh (Pakistan) and Punjab (India – Pakistan) have been hit by the water shortage due to the sharing obligation that face the countries.

“Although the government has fixed higher cotton crop production target for 2018-19 season at 14.37 million bales, so far the sowing of cotton which starts early in April in lower Sindh has yet to commence. The growers in lower areas of Sindh like Tando Adam, Shahdadpur and Hyderabad as usual started sowing cotton crop but after receiving no water their entire exercise went in vain.

Cotton from Sindh fields normally start reaching ginneries from June 15 each year but due to delay in sowing the crop would not be available before July 15, or may even go beyond this timeline.”

“Cotton, which should be planted latest by first week of May is also a casualty, since the water was supposed to come on Monday but it has not come, and what is on the way is less than one foot, which will reduce to two inches by the time it reaches the watercourses. It’s a disaster!”

Farmer based in Badi

Monsanto Case:

The Monsanto case in India that is expected to shift the outcomes of the country productions and organisation. Monsanto is an american company specialized in agricultural biotechnologies. April the 11th 2018 one of Monsanto’s patent has been declared not complying with the regulations anymore. The agri-biotech industry feels the ruling will impact future investment in the sector. Which we can deduct that as less investment would be done, it could impact the future global supply and thus move the prices up.

Fine, fine, fine:

The last element that bring an extra level of uncertainty on this market which lead to a higher volatility, is the fact that a cotton trading company is facing a fine of 2mio dollars because of some irregularities regarding their futures trading, the market could suspect that they are not the only one to do so and a scandal could be approaching.

A bit of history:

The cotton was once more important or equally important as opium for Hong-Kong, the shortage of cotton in the 1800’s due to the civil war in america. Lead to a huge importance for cotton throughout the world. It became one of the main economic activity for Hong-Kong.

“Meanwhile, cotton growing – and associated ginning and spinning enter­prises – was attempted in places as unlikely as Fiji and Mauritius. And production was massively expanded in places with historically significant cotton industries, such as India, Egypt and the Sudan. Cotton growing also started in Australia at about this time.”

It however took a turn, in 1940’s when the civil war (this time in China) rage and that cheap market labour was accessible and is shifts hong-kong from being a cheap cloth to manufactured garnements.

Cotton trading company fine up to 2mio

Crop destroyed

Monsanto case in india

Bit of history

Water issue

Seeds shortage

Price volatility

USD cents/ Ibs

The prices for the n°11 futures contract representing the world benchmark for the raw sugar market. From our last bulletin on April 16 2018, the prices were 12.07, and as of May 9, prices fell at 11.52

The world’s largest sugar-producing nations, including Australia, are questioning whether Indian and Pakistani exports are breaking trade rules. Large increases in production in the two subcontinent nations are being blamed for contributing to an oversupply of sugar that has weighed down the global market.

Prices have plunged below the cost of production for Australian cane growers and are expected to remain at low levels for the next couple of years.

The Global Sugar Alliance, led by Australia, Brazil and Thailand, is concerned that government subsidies incentivising the Indian and Pakistani sugar industries to produce more sugar could be breaking World Trade Organisation (WTO) rules. Under the rules, export subsidies are only allowed to cover the cost of internal transport.

Reuters reported last month that governments are subsidising the sector because it has been reeling from a supply glut and struggling to export because of low global prices.

Prime Minister Narendra Modi’s administration has decided to give 55 rupees ($0.82) for every tonne of cane sold to the mills by growers, said the source, declining to be named as he was not authorised to speak with media.

The issue is being discussed at a meeting in New York this week. (7-11 May 2018).


USD cents/ Ibs

Spot prices were at the lowest during September 2015. Sugar is largely in a bearish market for global supply. Since the beginning of 2017, the end of quotas in Europe is one of the main reasons on why the price is decreasing. As it is an agricultural commodity sugar is also subject to seasonable and cyclical factor combined with the oversupply driving down prices. The oversupply is said to be the result of good weather conditions and favorable government policies.


Trading companies

GENEVA, April 25 (Reuters)

Louis Dreyfus Company, one of the world’s largest agricultural commodity players, is bolstering sugar trading in Africa as it contends with heightened competition and depressed prices, a senior company official said.

He said the push in Africa, which will involve supplying the region with sugar from places such as Brazil, was part of the group’s review of its sugar operations. Sugar is core for LDC. We decided that either we adapt and change our business model, or we lose. The role of Dreyfus and other major players in the sugar market has been challenged by the emergence of new rivals, particularly from Asia

In the last six to eight years, the sugar business has become more competitive. New, integrated, players such as (China’s) COFCO and (Singapore’s) Wilmar have emerged, alongside smaller trade houses, specialized in niche markets.

West Africa is the most open market especially for LDC, which has a significant presence in Brazil. Brazil trades white sugar, is a significant exporter of white sugar, and is quite engaged with the West African countries. West African countries such as Ghana have already become key destinations that exporters such as Brazil and also the European Union are trying to target.

SAO PAULO, May 8 (Reuters)

Global commodities trader Bunge Ltd has hired banks to prepare an initial public offering (IPO) of its Brazilian sugarcane mills, but chances of an imminent launch are slim

The investment banking units of JPMorgan Chase & Co, Itaú Unibanco Holding SA and Banco Santander Brasil SA are working with the company on the deal.

Bunge Chief Executive Soren Schroder said last week the company may file with the Brazilian securities regulator for an offering as soon as this month.

Bankers are beginning to prepare the company for the offering, but investor interest seems to be small, as the global sugar glut pushed down prices and made it tough for mills to turn a profit.


Cocoa Price Evolution from February 2018 to May 4th 2018 in GBP/MT


The price of cocoa has continued to rise these past few weeks and is now at 1,875GBP/MT. This is explained by the change in weather since the abundant rainfalls in April, the climate in the main countries producing cocoa (Ivory Coast and Ghana) has been hot and dry, the supply is hurt and the price inevitably goes up. In our previous bulletin, we had mentioned an increase in demand coming from Europe which put pressure on price, which has been followed by an increase as well in demand coming from Asia and emerging markets.

London Cocoa Futures Curve as of May 7th 2018 in USD/MT


The shape of the forward curve has not changed too much since our last bulletin. However, the weather and its forecast did. In overall, all prices have risen.

The first part of the curve is still inverse which suggests a shortage in supply. The announcement made by Citigroup on the 16th of April that demand was rising and crops were dropping was also confirmed by Olam, the world’s third-biggest cocoa processor.

Then, from July to September the curve is in carry. In our previous bulletin, we explained it by the “above-average rainfalls in March, which would boost cocoa mid-crop with a higher quality than usual and secure supply”. However, since March the rainfalls have stopped and the weather is dry, which is below usual (in comparison to average and last year’s rainfalls, see table below).

From September the curve is inversed again which is due to seasonality (cf. bulletin n°2). However, the shape is more “flat” than 3 weeks ago, this could be explained by traders not willing to take position on these futures because of the current uncertainty of supply.

Source: created based on data found on (Average data) and (2017-2018 data)

New York Cocoa Market diverging from London’s

The London Market has traditionally been the favored market for physical cocoa trading. New York always traded at a discount to London (see graph below). But since the beginning of the year, cocoa is sold at a premium due to the wider rise in price in New York. Speculative funds would be the reason why a divergence in price increased between the two markets and the absence of activity from London (i.e. selling physical to New York which would balance prices in both markets) enforced the situation. In 2017, hedge funds of the New York Market held bearish positions for most of the year and switched to bullish positions in the early 2018 (without real apparent reasons linked to news). Apparently, according to brokers “anonymous computerised strategies now dominate flows in the New York Market” (for example with momentum trades or algorithms).

Authors : Sothea, Isabelle and Cindy

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