As usual we will do a small recap on the price of sugar. The first bulletin showed a price of 0.1379$ and the second one 0.1483$. Sugar today’s price reached 0.1451$. As we can see, price level tends to recover the prices before the pandemic.

Sugar price in USD/pound

Source: https://www.fxempire.com/commodities/sugar

World sugar prices:

As we can see in the graph below, sugar prices decreased in the recent years. In term of nominal price we can see that the prices are forecasting to increase. If we assume that weather will be normal, we can expect that India and Thailand crop will come back to their level as previous years.

In term of real sugar prices, we can see that it would remain at the level of 2019. This could be explained by the competitiveness of ethanol which is made from sugar.

World sugar crops production in the long term :

Here we can see a comparative and forecast between sugarcane and sugar beet in India, Brazil and the rest of the world.

That is interesting to see that biofuel such as ethanol represents more than the half of the total production in Brazil, whereas in India there is no ethanol production. Moreover, we can see that the production forecast for 2029 tends to increase. Indeed, Brazil will remain the main producer in ethanol. As we have seen in the last bulletin, India is impacted by public sector, that is why we can explain the small increase in the production on contrary to Brazil.

In addition to the graph above, this graph below shows the increase in the production of sugar. Especially in developing countries such as India and Thailand, because of the increase in demand.

Just to say something about the export, something changes in the currency. The real the 7th of December rose +0.99% against the dollar, which discourages export selling by Brazil’s sugar producers.

We can also look back at what is currently happening in India in terms of exports (in relation to the uncertainties related to subsidies). Thus, since Bulletin #2, Indian sugar mills have held back exports as they await news on government subsidies (still no news). The World Trade Organization (WTO) is expected to rule on the legality of India’s subsidies to its sugar exporters by the end of 2020.

Sugar demand in the long term :

The demand in sugar is expecting to grow and to come mainly from the developing countries. As we noticed, Asia and Africa will be the main contributor to the increase in demand of sugar (figure 5.5). Indeed, in figure 5.8 we can see that in Indonesia and China the sugar imports are expecting to grow substantially. In contrary, developed countries will decrease their demand, due to health concerns. But also due to taxes on caloric sugary products like in Mexico, that is why we can explain the drastic decrease in demand. The overall extent of the global recovery in sugar consumption will depend on how the COVID-19 pandemic develops in the coming months, and particularly on whether or not further lockdown measures would be imposed.

As we can see in the graph below we have a backwardation until October 2021 then a contango until March 2021 and finally a backwardation until October 2022.

 Sugar price in USD/pound

Recommendation :

As we can expect a backwardation we recommend to go long. But still we are in an uncertain time due to COVID-19 but also weather it means that prices need to be monitored, in order to be protected against eventual inverse price movements. Furthermore, the situation in India due to the public sector tends to remain uncertain.

References :

Sugar Price | FX Empire, [no date]. [online]. [Viewed 7 December 2020]. Available from: https://www.fxempire.com/commodities/sugar

No. 11 Sugar Futures Quotes – CME Group, [no date]. [online]. [Viewed 9 December 2020]. Available from: https://www.cmegroup.com/trading/agricultural/softs/sugar-no11.html



sugar_assessment_food_outlook_may_2019.pdf, [no date]. [online]. [Viewed 8 December 2020]. Available from: http://www.fao.org/fileadmin/templates/est/COMM_MARKETS_MONITORING/Sugar/Documents/sugar_assessment_food_outlook_may_2019.pdf

OECD iLibrary | Sugar, [no date]. [online]. [Viewed 9 December 2020]. Available from: https://www.oecd-ilibrary.org/agriculture-and-food/oecd-fao-agricultural-outlook-2020-2029_3736a600-en;jsessionid=80bZjxAzpg34HglxJQ0fpdbM.ip-10-240-5-119

Price movement recap

From the beginning of November, we have seen a sharp increase in the oil price: the performance is up by 30% on the WTI. The major reason behind this is the positive prediction regarding the vaccines of Pfizer and Moderna. The additional rebound was generated after the decision of the OPEC+ meeting. A consensus on the reduction of the production quotas for 2021 was agreed. Additional 500’000 barrels will arrive on the market every day, which is much less than the initially 1.9 million barrels planned.

WTI spot price:

Futures prices / Cost Curves:

It is interesting to note that the Curves of oil (orange curve) is no longer in contango but in backwardation as of June 2021. It means that traders/market think that the demand will be slightly higher than the supply from June. However, traders do not have a very precise opinion on the curve with both backwardation and contango. Moreover, with a relatively flat slope, it is difficult to affirm with certainty whether is it the supply or the demand that is higher than the other. It is more of a “wait and see” situation.

It’s also interesting to compare the actual future curve (orange) with the curve from a month ago (green). The market was clearly in contango: supply higher than the demand. The situation has evolved a lot since then.

Supply and demand dynamic

The OPEC and non-OPEC Ministerial Meetings, which were due to take place from 30 November to 1 December, finally took place on 3 December. During this event, they went back on their decisions of 6 June 2020, which consisted of reducing production to an average of 9 mb/d in 2020. The conclusion was that everyone followed the rules.

As for the future, they decided to reduce their production by 0.5 mb/d, from 7.7 mb/d to 7.2 mb/d, by January 2021. In addition, it was decided that there would be a monthly meeting to make adjustments if necessary.

We also think that the Biden’s global energy policy has an impact on the global supply and demand dynamic. Indeed, the climate change is at the center of his energy policy. Biden wants to considerably reduce the energy-related emissions, 15% of which are produced by USA.  He is also determined to rally rest of the world in follow this movement. If this scenario becomes real, the demand for oil may decrease in the medium term.

Recommendations

From an investment point of view, and based on the above, we recommend being long for the next 3 months. As explained, the optimistic forecasts for the vaccine could significantly increase demand, which could generate a backwardation. Moreover, the OPEC+’s decision on the reduction of oil production for 2021 could reinforce this trend.  The situation will need to be analyzed around April 2021, as the slope of the forward curve is relatively flat, and the market could swing back and forth.

Abbas Al-Azawi

Alexis Baeriswyl

Valery Sikorskiy

References

MCCORMICK, Myles and BROWER, Derek, 2020. Biden’s climate agenda goes global. [online]. 3 December 2020. [Viewed 9 December 2020]. Available from: https://www.ft.com/content/b2d315c6-876a-4d95-8c8f-0df4b86ee532

OPEC : The 11th OPEC and non-OPEC Ministerial Meeting concludes, [no date]. [online]. [Viewed 8 December 2020]. Available from: https://www.opec.org/opec_web/en/press_room/5966.htm

OPEC : The 12th OPEC and non-OPEC Ministerial Meeting concludes, [no date]. [online]. [Viewed 9 December 2020]. Available from: https://www.opec.org/opec_web/en/press_room/6257.htm

BOURSE,  Zone,  [no  date].  PÉTROLE  BRENT  (LONDON  BRENT  OIL) :  Graphique  de  Cours  Comparatif  | XBNT  |  XX00000BRENT  |  Zone  bourse.  [online].  [Viewed 8 December 2020].  Available  from: https://www.zonebourse.com/cours/matiere-premiere/LONDON-BRENT-OIL-4948/graphiques-comparatif/

https://www.cmegroup.com/content/cmegroup/en/trading/energy/crude-oil/dubai-crude-oilcalendar-swap-futures.html Le  pétrole  récupère  au  lendemain  d’une  forte  chute,  2020.  Allnews  [online].  [Viewed  8 December 2020].  Available from: https://www.allnews.ch/content/march%C3%A9s/le-p%C3%A9trole-r%C3%A9cup%C3%A8re-aulendemain-d%E2%80%99une-forte-chute

Petroleum,  [no  date].  [online].  [Viewed 9 December  2020].  Available  from: https://www.eia.gov/petroleum/weekly/

Price movement – Historical price (November-December 2020)

The Y-Axis represents the price of Copper per Metric Ton.

Source: https://www.lme.com/en-GB/Metals/Non-ferrous/Copper#tabIndex=2 – consulted December 9th 2020

Several factors can explain the increase of Copper’s price over the last month. Starting with the increase in demand due to China’s strong growth manufacture-wise as well as its increase in copper stored related to a possible new stockpiling policy by the Chinese Government. The increase in demand is also explained by the still-low level of US dollar’s value and the global economic and manufacturing bounce back due to hope related to vaccines announcements from several countries.

The decrease in supplied quantities due to sanitary reasons in south America and political tensions in Peru (2nd biggest mining country) which created tensions on the investing side. 

For economical reasons, the crossing between supply and demand in the above-mentioned situation implies an increase in price.

Price movement- Forward Curve

Data source: https://www.cmegroup.com/trading/metals/base/copper.html – consulted December 9th 2020

The graphic shows that the forward curve on the 09.12.2020 is different from the one on the 18.11.2020 and the one from 29.20.2020. The price of the forwards in the 09.12.2020 is higher than the ones before, we can therefore assume that the market is doing better than expected. 

The curve is relatively flat with a small contango. The small contango suggests that the supposition of the market today is that the supply over the year is going to be relatively good. Yet, the fact that it is almost flat suggests that the market is uncertain towards the evolution of Copper’s price and that it can go up as it can go down more or less quickly. 

The uncertainty can be related to different aspects. The first one is that investors fear the coronavirus crisis might worsen and this could result in a shortage of supply, or lower the demand due to the lack of economic activity. But, since the UK started vaccinating people on the 08.12.2020 and many other countries are following, the worries about COVID-19 are lower than before. Observers expect the COVID-19 to ease in the future.

The instability of the dollar index is also affecting the demand and supply of the copper as all the commodities traded on the CME market.

Illustration of supply and demand dynamic of copper

Source: http://www.kitcometals.com/charts/lmewarehouse.html – consulted December 9th 2020

Warehouse stocks level of copper is running low for mainly 2 main reasons:

• The Chinese economy is the only one growing correctly due to a serious control of the COVID19. There is no lockdown anymore and Chinese production/consumption of copper for infrastructure is getting back to the usual level despite a lower supply level than “usual”.
• Markets like Europe are looking to boost their inventories because if a vaccine is found, the sector of renewable energy, electric vehicles and manufacturing will need a reserve of copper.

The supply from countries like Chile are still impacted by the COVID19 and the production did not catch up to the normal level from the previous year. The demand is high due to the recovery of China, the weakening of the US dollar and an expected future economic recovery in the majority of importer’s countries. Both of these factors are driving copper’s price high as we can see on the historical graph and the future’s market price.

Recommendations to be short or long for the next 3 or 6 months

The forward curve on the 09.12.2020, has a small contango yet it’s relatively flat, we would advise going long for the next 6 months. We think that the economic activity will pick up hard after the administration of vaccines all over the world, the administration of vaccines will take months, but after the economic activity picking up, a shortage of copper will appear and that will be the moment to go short and sell what have been bought now. 

Sources

BFM BOURSE, Cac 40: Le cours du cuivre s’envole à un sommet depuis Mars 2013, published December 6th 2020, consulted December 9th 2020, available from: https://www.tradingsat.com/cac-40-FR0003500008/actualites/cac-40-le-cours-du-cuivre-s-envole-a-un-sommet-depuis-mars-2013-943515.html 

MINING JOURNAL, Copper news, published December 2nd 2020, consulted December 9th 2020, available from: https://www.mining-journal.com/copper-news/news/1400534/chile-copper-production-down-in-october 

ECONOMIES.COM, Copper turns lower as investors grow more cautious, published December 3rd 2020, consulted December 9th 2020, available from: https://www.economies.com/commodities/copper-news/copper-turns-lower-as-investors-grow-more-cautious-36967

https://www.economies.com/commodities/copper-news/copper-rises-on-strong-demand-and-falling-dollar-36918

CAPITAL.COM RESEARCH TEAM, Copper price forecast for 2021: moderately bullish with strong headwinds, published October 28th, consulted December 9th 2020, available from: https://capital.com/copper-price-forecast-2021

by Ismail MODAFFAR IDRISSI, Tashi JARRON & Amélia REUSSER

Cocoa news: 

In recent weeks Hershey Company, one of the world’s largest chocolate manufacturers, has adopted an unconventional cocoa beans sourcing approach (Wink 2020). Indeed, in mid-November, the multinational acquired this commodity through ICE Future exchange.

The deals with middlemen account for the majority of cocoa beans sourcing globally. By adopting this new approach, the manufacturer is avoiding usual premiums. It represents a major change in the Hershey strategy. Traditionally, the company is using physical sellers to supply beans, not ICE Future exchange.

Coffenews: 

A manager of Tanzania Coffee Board (TCB) has declared to be positively surprised regarding the impact of the COVID-19 on the commodity (Tempa, 2020).

As shown below, the Coffee Futures prices have not seen significant variations. Currently, the new pandemic only affects the transportation of the commodity to overseas markets but it saved the export prices. In 2019, the price at local Tanzanian auctions was around 119$ for a 50kg arabica bag. It was not far below the 133$ on November 5 of this year.

However, for the same quantity of coffee, the export prices were only about 116$. The situation is also similar regarding the more affordable coffee variety, the robusta. Local prices are higher than the export prices.

According to the same TCB manager, this situation can be explained by the quality increase of Tanzanian coffee, the drop of coffee consumption due to the COVID-19 and recent decreases in price for the rest of the market.

Cocoa price

Due to the situation mentioned above, the Cocoa’s forward curve has slightly increased the backwardation it was in. The curve on 18 Nov. 2020 was already pricing in the situation and as it has not been resolved the near term contract has only slightly moved. The spot contracts have also partially priced in the additional 400 USD / MT required by Ghana and Côte d’Ivoire amounting to 2636 USD / MT which is 206 USD over the price prior to Hershey’s ICE deal.

Cocoa forward curve comparison, as of 09/12/2020

Cocoa historical price, as of 09/12/2020

Coffee price

The coffee’s forward curve has only slightly moved lower compared to the previous bulletin and its shape has not changed. The lack of major events, with the overwhelming situation of lock-down due to COVID 19, is not perturbing the long-term market. Interestingly, Starbucks just released its forecast for 2021 with an increase in consumption of up to 12%.

Coffee forward curve comparison, as of 09/12/2020

Coffee historical price, as of 09/12/2020

Recommendation

Cocoa

The second COVID-19 wave hitting Europe has not impacted as much as fear the demand for cocoa. In addition, the new vaccine homologations submitted by several pharmaceutical companies (Yahoo, 2020) could lead to a decrease in the pandemic in developed economies. Thus, the decline of the COVID-19 can allow an increase in demand because the employees would return to their workplaces. Finally, if Hershey Company continues with its new sourcing strategy it could push the prices higher for the following months.

Coffee

As previously described in this bulletin, there was a lack of important events in relation to this commodity from the last 18 November bulletin 18 Nov. However, as for the cocoa, the vaccine campaigns which are about to begin in numerous countries including the US and Western European countries could positively influence the world demand.

Disclaimer

This publication is for your information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. The analysis contained herein does not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific recipient.  It is based on numerous assumptions

Reference

• “CJ: NMX Historical Data”. NASDAQ, 2020, https://www.nasdaq.com/market-activity/commodities/cj%3Anmx/historical. Accessed 09 Dec. 2020.

• “KT: NMX Historical Data”. NASDAQ, 2020, https://www.nasdaq.com/market-activity/commodities/kt%3Anmx. Accessed 09 Dec. 2020.

• Futures, Cocoa. “ICE Futures And Options”. Theice.Com, 2020, https://www.theice.com/products/7/Cocoa-Futures/data?marketId=5932293. Accessed 09 Dec. 2020.

• Futures, Coffee. “ICE Futures And Options”. Theice.Com, 2020, https://www.theice.com/products/15/Coffee-C-Futures/data?marketId=5673521. Accessed 09 Dec. 2020.

• Ico.Org, 2020, http://www.ico.org/ Accessed 09 Dec. 2020.

• Icco.Org, 2020 https://www.icco.org/ Accessed 09 Dec. 2020.

• Temba, Florah. “Tanzania Coffee Prices Rise Despite Impact Of Covid-19”. The Citizen, 2020, https://www.thecitizen.co.tz/tanzania/news/business/-tanzania-coffee-prices-rise-despite-impact-of-covid-19-3214982. Accessed 9 Dec 2020.

• “US Stocks End At Fresh Records On Vaccine Progress, Extending Rally”. Au.Finance.Yahoo.Com, 2020, https://au.finance.yahoo.com/news/equities-mixed-focus-vaccine-virus-033442598.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALqSfEEZSSRWhA52irBjuuBXUNh302fBSGYymUtUZljigqtm_AvTTfEBOfhZetNu-ihpMjLq8_LnUvFxg5ZHvE1VL1hQjslfFcQcenFUbK3lfnZDWnn8dMJ_g0G1-ByTJoXvyhvv6jKRTwSS2kk6pg1ozfdwwOWnGYtpbz-6aDqh. Accessed 10 Dec 2020.

• Winck, Ben. “Hershey Drove A Record Spike In Cocoa Prices After Reportedly Sourcing Beans From The Futures Market Instead Of Physical Sellers”. Markets.Businessinsider.Com, 2020, https://markets.businessinsider.com/commodities/news/hershey-cocoa-futures-record-spike-commodity-futures-market-ice-exchange-2020-11-1029831388. Accessed 9 Dec 2020.

Cobalt :

As we know from the market overview, DRC accounts for roughly 70% of world mined cobalt and Chinese companies account for 8 out of 14 cobalt main refineries. A market completely dominated and controlled by the two.

By the time cobalt arrives for the battery manufacturing, the sources of cobalt are unknown. We do not know where it comes from anymore but since DRC is accounting for more than half of world production, it is normal to think that there is a very high chance that it comes from there. DRC has been under the radar for being a country where children are known to be working in Cobalt mines. Moreover, the working conditions have been reported to be very poor and unfortunately led to the death of thousands of people.

A lawsuit against the big Tech companies such as Apple, Microsoft, Tesla and Google has been launched in the end of 2019^[1]. Congolese families are asking for damages: as mentioned above, the big techs are being accused to aid force labour, children labour and poor working conditions. Companies are now seeking a more transparent supply chain but also other sources in other to be sure that the Cobalt they are buying is considered “clean”: BMW signed a $110mio deal with Morocco’s cobalt company Bou Azzar Mine, Tesla has agreed to buy 6’000 tonnes/year of Cobalt from Glencore (we will see why further down); Companies such as Ford, IBM and LG are using block chain technology to trace accurately the source of their cobalt^[2]; More interestingly, north America, Canada, explorations have started in order to find new sources of Cobalt^[3]

A lawsuit against the big Tech companies such as Apple, Microsoft, Tesla and Google has been launched in the end of 2019^[1]. Congolese families are asking for damages: as mentioned above, the big techs are being accused to aid force labour, children labour and poor working conditions. Companies are now seeking a more transparent supply chain but also other sources in other to be sure that the Cobalt they are buying is considered “clean”: BMW signed a $110mio deal with Morocco’s cobalt company Bou Azzar Mine, Tesla has agreed to buy 6’000 tonnes/year of Cobalt from Glencore (we will see why further down); Companies such as Ford, IBM and LG are using block chain technology to trace accurately the source of their cobalt^[2]; More interestingly, north America, Canada, explorations have started in order to find new sources of Cobalt^[3]

The industry is recognizing the fact that there are other sources that can be compared to what is found in the DRC. Canada is a good candidate with a possible large amount of Cobalt to be mined in Ontario. A good sign that is proving this fact is that Glencore, the biggest mining company in the world, owns many land in the area and has built the very first cobalt refinery in north America. This means that refined cobalt will be traceable from there and considered as “clean”.

^{_{https://www.google.com/maps/place/Ontario,+Canada/@48.9552626,-93.7065152,5z/data=!3m1!4b1!4m5!3m4!1s0x4cce05b25f5113af:0x70f8425629621e09!8m2!3d51.253775!4d-85.323214}} 
A discovery of substantial cobalt reserves in the region would distort the actual Cobalt supply chain, which is, like mentioned previously, a DRC-China monopoly market with no clear sourcing tractability. We could also expect a price drop due to a new source of supply. If Glencore or others manage to build new cobalt refineries, it could also help refined cobalt

to be cheaper and less dependent on China (let us remember that China produces 80% of

the world’s refined cobalt)^[4].  Tesla has also announced that it would reduce its cobalt usage for their batteries in the near future^[5].

There is no denying that the EV growing demand and the consumer electronic market will drive cobalt demand higher: In the short term, we could see Cobalt’s price increasing while in the long term, for the reasons mentioned above, we could see it decreasing. A market to follow. 

Lithium:

China is striving for global leadership when it comes to Lithium by controlling the supply chain.

It’s used in batteries, glasses, ceramics, pharmaceuticals, and aluminium and magnesium alloys, aerospace industry, bicycle frames and high-speed trains. It is also used in some non-rechargeable batteries for things like heart pacemakers, toys and clocks.

China is the world’s largest manufacturer of mobile phones, computers, televisions and automotive industry. And the EV industry is expanding significantly and that’s why China is the largest consumer of lithium which is an essential metal in producing batteries. 

When it comes to production, China is among the five top countries with the most lithium reserves and was producing 25% of the world’s lithium as of 2019. According to the 2020 USGS report, China has been buying stakes in mining operations in Australia and South America where most of the world’s lithium reserves are found. In 2020, China’s Tianqi Lithium now owns 51% of the world’s largest lithium reserve, Australia’s Greenbushes lithium mine. Which would eventually increase the production of Lithium. The Same company also paid about $4 billion to become the second-largest shareholder in Sociedad Quimica y Minera (SQM), the largest lithium producer in Chile.^[6]

Another Chinese company, Ganfeng Lithium, now has a long-term agreement to underwrite all lithium raw materials produced by Australia’s Mount Marion mine, the world’s second-biggest, high-grade lithium reserves. (1) . All these actions will mean that China would be the biggest player in this game and investing a huge amount, becoming the largest producer and the consumer and hence will be manipulating the prices. Moreover, making others dependent on China to whom it can sell the lithium on a price higher than the spot price. The dependence on China for lithium will affect the electric vehicle ecosystem even more than other sectors because 40% of the cost of an electric vehicle is attributed to its battery. “China’s dominance of the industry is to be expected given its huge investments and the policies the country has implemented over the past decade.” ^[7]

Moreover, it is interesting to see how the EU, US and other countries are trying to find alternatives and solutions in order to not be dependent on China. For example, a $20 million investment led by a Bill Gates-backed fund into a lithium-mining technology firm, called Lilac Solutions, is considered to be a “game-changer”. The firm stated that “its ion exchange technology is twice as efficient as the current mining process and takes a fraction of the time.” The technology could also unlock the vast potential of Bolivia, which has the world’s largest lithium resources but doesn’t produce any because of tricky weather conditions. If you have a lot of weather like rain and clouds, it makes it very difficult to extract. ^[8].

Graphite:

A look back at 2019

China shifts away from upstream production of graphite towards downstream production. The country increased its imports of graphite mainly from Africa. China imported more than 53,000 metric tons of natural graphite in the first three quarters of 2019 (mainly from Mozambique and Madagascar), compared to just 12,000 metric tons in the same period of 2018.

This triggered volatility in the market. In September, the Balama graphite project in Mozambique (the largest natural graphite project outside China) decided to reduce its output. The company cut back production from 15,000 metric tons per month to 5,000.[9]

There is no standard, quoted prices for natural graphite and there is no spot or futures market. After peaking in 2012, graphite prices experienced a sharp drop due to the slowdown in the Chinese economy and a lack of growth in western economies. Since that time they have been sideways to down as the market waits for continuing growth in the battery industry to use up excess capacity in China. [11]

2020

Supply dynamics have evolved since 2017 because of projects led by producers outside China, including Syrah Resources. The Syrah Resources are an Australia-based graphite miner with operations in Mozambique. Syrah’s flake graphite exports to China amounted to about 75% of China’s total flake graphite imports in 2019. This flipped China from being a major exporter to a major importer of graphite. Additionally, China’s own graphite resources are becoming deeper and more expensive to mine. As a consequence, China is investing in Africa which is logistically useful for Chinese customers and has major graphite resources. China has a recent history of investing in Africa, which has relatively cheap labor and other overheads.

Graphite consumers outside Asia, especially those in Europe and the United States, are expected to diversify their supplier base because of skyrocketing costs for freight from China and the strength of the East Asian country’s yuan. Soaring freight rates and container shortage during the Covid-19 pandemic disrupted graphite supply outside of China. Additionally, production from Africa has slowed since Syrah halted output from its Balama mine in Mozambique in March. [10]

Sources :

1. https://www.theguardian.com/global-development/2019/dec/16/apple-and-google-named-in-us-lawsuit-over-congolese-child-cobalt-mining-deaths
2. https://www.visualcapitalist.com/ethical-supply-the-search-for-cobalt-beyond-the-congo/
3. https://www.bloomberg.com/news/articles/2020-07-07/bill-gates-backed-company-to-hunt-for-cobalt-near-glencore-mine?sref=53TBor5N
4. https://www.mining.com/chart-chinas-stranglehold-on-electric-car-battery-supply-chain/
5. https://www.reuters.com/article/us-tesla-china/tesla-to-roll-out-china-made-model-3-cars-with-cobalt-free-lfp-batteries-sources-idUSKBN26L26S
6. https://qz.com/1812892/coronavirus-may-have-lasting-effect-on-china-dominated-lithium-sector/
7. https://mercomindia.com/china-leads-lithium-ion-battery/
8. https://qz.com/1805808/bill-gates-led-investment-may-be-game-changer-for-lithium-mining/
9. https://investingnews.com/daily/resource-investing/battery-metals-investing/graphite-investing/graphite-outlook/
10. https://www.metalbulletin.com/Article/3963483/Graphite/FOCUS-Surging-freight-rates-encourage-demand-shift-in-graphite-market-sources-say.html
11. http://www.northerngraphite.com/about-graphite/graphite-pricing/

PRICE MOVEMENT RECAP

The graph shows that the price continues to increase as expected. The worldwide supply is currently low since latin american producers are not in their harvest season and that the US is done with their harvest season. Moreover, the production of soybeans in Brazil and Argentina is uncertain because of the La Niña phenomenon. There have been extreme low rainfalls, altering the growth of soybeans. Now, the lands are extremely dry, which will postpone the planting season and thus alter the supply. Although Argentina seems to experience better weather, their contribution to the worldwide production is not significant enough to make up for other countries’ decreasing production. The consequences of this is that the supply is low but the demand is high, since China is continuing to buy a lot from the US. Thus, the price will continue to increase. 

What is interesting is that some chinese importers are willing to cancel the purchase of some of the agreed US cargoes for December and January, since they have not entered into a futures contract before, as they were not expecting such a rise in the price. Importing soybeans at the current price means that they would lose money. The potential consequences on the price remains unknown since the size of the cancelled cargoes has not been disclosed.

Additionally, Biden’s administration is expected to maintain the US’ trade tariffs policy on China, but will be more predictable to China compared to Trump’s administration, as said by Lee Heng Guie, executive director of the Associated Chinese Chambers of Commerce

Worth mentioning that the Biden administration is focused on multilateral approach.

China has committed to purchase US$36.3 billion worth of US agricultural products, including soybeans, in 2020 and US$43.3 billion in 2021 as agreed in the Phase 1 of their agreement on trade. 

However, China has been buying more soybeans from Brazil than usual, resulting in Brazil selling more than the US to China. 

Therefore, as Brazil had to sell more to China, both countries needed to buy soybeans from the US to meet their requirements. This results in a tight supply and demand, increasing soybean prices.

INVENTORY

When it comes to the world ending inventory of soybeans, they unsurprisingly declined over the past three years as shown below:

Source: CME Group

Even though much of it can be attributed to Brazil, the ending stocks of US soybeans have significantly dropped as well (-333 million of Bushels, which represent a decrease of 64% from year 19/20 to year 20/21) which is explained by a reduced production in most of the producing states, and an increasing demand mainly from China, but also from Brazil, which has been forced to import US soybeans since their local production was altered due to reduced rainfalls. In fact, the situation is such that 20/21 could record the lowest ending stocks of soybeans since five years, according to the Agriculture and Horticulture Development Board.

SUBSTITUTES

CORN

Corn is a substitute for soybean that China is using to feed livestock. This, coupled with the plunging Ukrainian production resulted in a 32% price increase between June 1st and November 30th

CRUDE PALM OIL

Soybean and palm oil are considered substitute goods because importers can easily switch between the two commodities. Most of the world’s palm oil production is located in Indonesia and Malaysia. There is a high volatility in the spread relationship between the two commodities because a drought in the United States could alter the soybean oil supply one year, while disease in Southeast Asia could alter the palm oil supply next year. 

The two markets tend to move together. In fact, with the increase of soybean prices, this increases the price of crude palm oil as well. 

In 2017, Malaysia exported 2.87 million tonnes of palm oil to China. However, the trade agreement between the US in China might in the long term affect the Malaysian exports of CPO. China might buy more soybean from the US than CPO from Malaysia.

RECOMMENDATION

As discussed, the production (supply) is uncertain for the following months due to weather issues in Latin America. Moreover, the demand is still high, showing an increase in the price. Since the production is uncertain coupled with COVID-19, the price will continue to increase and we can expect stocks at the beginning of the year to be lower compared to the previous years. We recommend going long over the next months as the supply will remain low. 

With the US-China trade agreement, we can assume that the export (from the US) of soybean will drastically increase. However, this remains uncertain as China may “washout” imports from the United States.

REFERENCES

China Says Its Grain Imports Not to Blame for Global Price Surge – BNN Bloomberg, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://www.bnnbloomberg.ca/china-says-its-grain-imports-not-to-blame-for-global-price-surge-1.1529331

Chinese buyers look to cancel U.S. soybean orders as processing margins shrink | Reuters, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://www.reuters.com/article/us-china-soybeans-cancellations/chinese-buyers-look-to-cancel-u-s-soybean-orders-as-processing-margins-shrink-idUSKBN28510H

Corn Prices – 59 Year Historical Chart, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://www.macrotrends.net/2532/corn-prices-historical-chart-data

Cover Story: ‘Predictability’ is the word to describe Biden’s trade war approach, 2020. The Edge Markets[online]. [Viewed 2 December 2020]. Available from: http://www.theedgemarkets.com/article/cover-story-predictability-word-describe-bidens-trade-war-approach

FEEDNAVIGATOR.COM, [no date]. Bullish picture for maize and soybeans. feednavigator.com [online]. [Viewed 2 December 2020]. Available from: https://www.feednavigator.com/Article/2020/11/12/Bullish-picture-for-maize-and-soybeans

Geosys How is La Niña impacting Brazilian and Argentina crops?, 2020. UrtheCast [online]. [Viewed 2 December 2020]. Available from: https://www.urthecast.com/how-is-la-nina-impacting-brazilian-and-argentina-crops/

snd_cbt.pdf, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://www.cmegroup.com/trading/agricultural/files/ht_charts/snd_cbt.pdf

spreading-cbot-soybean-oil-and-bmd-crude-palm-oil.pdf, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://www.cmegroup.com/trading/agricultural/files/spreading-cbot-soybean-oil-and-bmd-crude-palm-oil.pdf
wasde1120.pdf, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://www.usda.gov/oce/commodity/wasde/wasde1120.pdf

Group 3 – K
Maxime DOLLA, Mahona PENNA, Romane POUCHON

Price movement recap

WTI Spot price has remained more or less around USD40/barrel from September to November and now since November 19^th we can see an increase in price that reached 45.2 on the 30^th of November. This increase in price might be explained by the fact that the economy is slowly recovering and also because of many announcements of potential prospects for vaccines against covid-19 from 2021.

Forward curve 2.12.20

CME GROUP., [09.11.20]. NYMEX WTI Crude Oil Futures & Options. In : [online]. 

Available at : http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html. 

The forward curve shows that the market is in contango for the moment which means the spot price for delivery now is lower than today’s price for delivery in future. This means our market is relatively well supplied. Supply is greater than demand now, 

However, as we can see from May 2021, we cannot be sure that the market will remain in a contango situation or will go to backwardation. Indeed, OPEC recently met and agreed to delay their planned increase in production, so there are uncertainties about whether the market will be well supplied or in shortage. If the market underestimates the economic recovery and consequently is faced with a shortage, it would mean that demand is greater than supply. Hence the spot price for delivery now might be higher than the price for delivery in a future period. The demand would send a message to the market: Don’t store! Deliver now!

ANN KOH AND ALEX LONGLEY., [02.12.20]. Oil prices stabilize as OPEC focuses on diplomacy. In : [Online]. [Consulté le 3 décembre 2020]. Available at : https://www.worldoil.com/news/2020/12/2/oil-prices-stabilize-as-opec-focuses-on-diplomacy.

Differential WTI vs Brent: SHALE OIL !

WTI crude oil is shipped by pipeline to Cushing. Its storage site, situated at the far end of Oklahoma, makes it expensive to ship and export in terms of transportation, rendering it primarily processed in the national territory and intended for United states consumption. Pipeline market

Brent crude oil, due to the geographical position of its storage location, which has a deepwater port, large volumes are moved by tankers around the world, reinforcing its relevance as a global reference.Off-shore market.

The main cause of the differential in WTI relative to Brent are due to an excess of light crude oil (SHALE) on the US market and the inability of US refineries to refine it. Since 2015, Ban on exporting US crude is lifted, narrowing the differential. But still, US crude exports are challenging and expensive.

ANON., [10.10.18]. Oil: Why is Brent more expensive than WTI? | Hellenic Shipping News Worldwide. In : [Online]. [Consulté le 3 décembre 2020]. Available at : https://www.hellenicshippingnews.com/oil-why-is-brent-more-expensive-than-wti/. 

ANON., [03.12.20]. Brent WTI Spread. In : [Online]. [Consulté le 3 décembre 2020]. Available at : https://ycharts.com/indicators/brent_wti_spread.

Supply and demand dynamic – Inventory levels

During the week that ended the 20 of November, the American Petroleum Institute (API) has reported the oil production at 11 million barrels per day, it represents a build of 3.8 million barrels in oil inventories.

The following week, an increase in inventories of crude oil of 4.146 million barrels has been reported by the API. Both weeks are above what analysts expected.

According to analysts, OPEC+ is likely to extend its current production cuts until January, rather than easing them.

An acceleration in shale drilling would complicate OPEC+’s calculations, but the recovery in U.S. shale drilling “remains modest and aimed at stabilizing production instead, as confirmed by recent earnings comments and a commitment to return cash to shareholders,” Goldman analysts wrote in a note.U.S shale production is expected to decline by 140,000 bpd in December, month-on-month, according to the Energy Information Administration (EIA). The decline is spread between all major shale basins (Permian, Bakken, Eagle Ford, Niobrara, Anadarko)

ANON., [27.11.20]. U.S. Shale Production Continues Its Decline. In : OilPrice.com [online]. [Consulté le 3 décembre 2020]. Available at : https://oilprice.com/Energy/Energy-General/US-Shale-Production-Continues-Its-Decline.html. 

Recommendations:

December 1st, 2020.

General oil prices were trading down, while the WTI Crude stayed stuck around $40s dollars per barrel. Despite the Covid-19 situation optimism, OPEC ended its 30th November meeting without production plans for 2021. US shale oil output is expected to have a big drop in supply according to the US Energy Information Administration (EIA). Due to the reduction of spending in this production.

Josh Owens., [10.11.20]. Oil Optimism Returns On Fresh Vaccine News | OilPrice.com. In : [Online]. [Consulté le 3 décembre 2020]. Available at : https://oilprice.com/Energy/Energy-General/Oil-Optimism-Returns-On-Fresh-Vaccine-News.html. 

With the crash in prices due to the demand collapse in early March, the U.S. drillers reduced their spending/production in response to it. Which led to thousands of lost jobs in the sector. The U.S. shale has suffered from the pandemic this year, moreover with the incoming Administration of Joe Biden the shale will again be targeted. As Joe Biden’s promise to ban new oil and gas drilling on federal lands and waters.

Tsvetana Paraskova., [25.11.20]. U.S. Shale Bankruptcies Accelerate Despite Pandemic Protection. In : OilPrice.com [online]. [Consulté le 3 décembre 2020]. Available at : https://oilprice.com/Energy/Energy-General/US-Shale-Bankruptcies-Accelerate-Despite-Pandemic-Protection.html. 

Compared to our last bulletin where the price was at $42.59 and now raising to $44.70 per barrel (price today for delivery in december) the recommendation was to be long (buy) for the next 3-6 months and still the same as of today. The future consumption of oil is expected to rise continuously throughout the year, since the arrival of the pandemic’s protection. The market being well supplied will be contango. Therefore it will be better to be short (sell) in a future period sometimes next year.

ANON., [2.12.20]. WTI Crude Oil Price Charts. In : OilPrice.com [online]. [Consulté le 3 décembre 2020]. Available at : https://oilprice.com/oil-price-charts. 

Price evolution

The price of cotton recently almost retrieved its pre-pandemic level. Nevertheless, according to John Robinson, PHD, AgriLife Extension cotton economist this will not last.

Indeed, like most of markets during the pandemic the cotton price fell more than 20 cents, from 70 cents per pound to 49 cents per pound from February to April.

What has helped increase cotton’s price is the fact that the Chinese Government began to buy cotton bales to increase their reserves which has helped to obtain a steady upward price.

Moreover, the US climate was not ideal to produce cotton this year, Many US regions such as Texas and Georgia had droughts, multiple tropical storms followed by freezing temperature. This bad weather triggered price speculator buying cotton, which helped cotton to gain back its price of 70 cents as of November.

Pakistan might also be playing a role in the increase of Cotton’s price. Indeed, Pakistan had many of its agricultural crops in several areas destroyed due to heavy rains, pest attacks and locust invasions. The government is under pressure to bring down price of essential goods and support its textile sector (biggest employer) and is therefore planning to import huge volumes regardless of the rates. The fact that the supply is lower than usual due to the bad weather conditions in several producing country, and that the demand is increasing also explains why the price is moving upward.

Supply & Demand

Covid-19 has driven to a collapse in world’s price. According to Cotton Outlook, by the end of 2019/20 the cotton world consumption estimate has fallen from 27million tonnes to below 22 million in just two years. We can see it thanks to the green bars on the graph.

The speed of recovery in consumer demand remains uncertain. The recent apparel imports suffered from a postponed demand as consumers purchases were initially delayed. Furthermore, some lost demand, such as 2020 summer and vacation, clothing school uniforms for some countries, hotel cotton bed sheets and towels, etc, could maybe never be recovered. The remote work and school purchases remains unknown.

The production of cotton for 2019/20 was barely affected by the pandemic. Cotton was already picked in the Northern Hemisphere and was already planted in the South. Nevertheless, the volume of cotton unshipped, unconsumed, or unsold was of potentially catastrophic proportions still according to Cotton Outlook. The rise in world stock during 2019/20 was of around 3.9 million tonnes.

The global cotton production is forecasted at 18.6 million for a 480-pound bale. This means that it increases up by 1 percent from November but down by 11 percent from last year. The futures prices shos us that supply and demand should increase, mostly during spring when seeding will begin.

Forward Curve

The December future contract being at its end with 20 cents up, we can see that all cotton futures have slightly increased accordingly. We are still in a contango situation (Price on the 3rd of December 2020: 69.99) and it may still increase if the COVID-19 pandemic stabilizes.

Recommendations

Bad weather condition in several producing countries and the still ongoing COVID-19 pandemic is still affecting the forecast of cotton prices. And with the fact that the futures price is on the rises at least until July 2021 where it will be valued 73.510 we recommend to go long on cotton investment.

Sequeira Reny, Tiago Marques & Nicole Peytregnet

Bibliography

World Cotton Day – Cotton Outlook Feature, [no date]. [online]. [Viewed 1 December 2020]. Available from: https://www.cotlook.com/world-cotton-day-cotton-outlook-feature/

4.5.3-Cotton trading-The fundamentals of cotton supply and demand, [no date]. [online]. [Viewed 1 December 2020]. Available from: https://www.cottonguide.org/cotton-guide/cotton-trading-the-fundamentals-of-cotton-supply-and-demand/

cotton: Cotton exporters hope to resume trade with Pakistan – The Economic Times, [no date]. [online]. [Viewed 2 December 2020]. Available from: https://economictimes.indiatimes.com/markets/commodities/news/cotton-exporters-hope-to-resume-trade-with-pakistan/articleshow/72000396.cms

Cotton No. 2 Futures | ICE, [no date]. [online]. [Viewed 3 December 2020]. Available from: https://www.theice.com/products/254/Cotton-No-2-Futures/data?marketId=5739902

Cotton prices rebound, but supplies high, 2020. AgriLife Today [online]. [Viewed 2 December 2020]. Available from: https://agrilifetoday.tamu.edu/2020/11/10/cotton-prices-rebound-but-supplies-high/

cotton.pdf, [no date]. [online]. [Viewed 1 December 2020]. Available from: https://apps.fas.usda.gov/psdonline/circulars/cotton.pdf

CT1 Commodity Quote – Generic 1st “CT” Future – Bloomberg Markets, [no date]. [online]. [Viewed 1 December 2020]. Available from: https://www.bloomberg.com/quote/CT1:COM

DILAWAR ISMAIL, 2020. Pakistan Steps Up Imports of Farm Goods to Curb Soaring Prices. . 2 October 2020. [Viewed 2 December 2020]. Available from : https://www.bloomberg.com

Global cotton prices increase in October, 2020. [online]. [Viewed 3 December 2020]. Available from: https://www.just-style.com/news/global-cotton-prices-increase-in-october_id140137.aspx

World Cotton Day.pdf, COTLOOK LIMITED, [2020]. . [online]. [Viewed 1 December 2020].Available from : https://www.cotlook.com/world-cotton-day-cotton-outlook-feature/

Price movement, demand & supply analysis

We can observe on this graph the price evolution of natural gas spot price over the year 2020. We have to highlight the fact that due to this overall unstable economic situation established with the Covid-19 pandemy, NG and LNG prices drastically decreased and reached a lowest price record achieved. However, we can still observe the seasonality of this commodity through this graph. Indeed, the demand as we have seen increase during the winter time which is reflected on the price. That is to say, in December 2019, we can see that the price went above 2.40 USD/MMBtu and reached this level back in September in 2020 before hitting rock bottom record in the same month. After this, the price raised again according to expectations based on the demand seasonality.

Exportations:

The graph above represents the U.S LNG export from 2018 to 2020 Q2. We can observe that the U.S export of LNG over the year drastically increases in overall. Even though Japan is the world’s biggest importer of LNG accounting with 20% of the global consumption, we can see that South Korea is the main purchaser in the United states, South Korea were making massive effort of consuming cleaner energy (however they have long-planned nuclear and coal plants projects in the coming years-> consumption of LNG is expected to decrease over time). We can see that Korea is closely followed by Japan which uses LNG to generate nearly 40% of its power. In the U.S export the European countries are leading by country such as Spain, France and Netherland which become major importer due to drop in domestic production and coal to gas switching. Concerning the export to Mexico the Sur de Texas-Tuxpan pipeline which was complete in Q4 2019, the U.S. LNG exports to Mexico have been displaced by pipeline flow. Between Q1 and Q2 in 2020 we can see the massive drop for the U.S export globally due to the COVID-19 breakdown combined with a warmer winter affect the demand of LNG.

Forward Curve:

A therm (thm) equals 100’000 British thermal units (Btu).

There are many factors that can affect oil and gas prices. Some of these include the changing dynamics of supply and demand, the amount and cost of storage available, changes in interest rates, fluctuations in foreign exchange rates, the marginal cost of supply, assessment of geopolitical risk and supply shock and the market opinion and expectation and many more influences.

In this case, futures are highly dependent on seasonality of demand and result in a curve that is neither a contango or a backwardation curve but a mix of both depending on the period. We can see that the incentive in January 2021 will be to sell as much as possible whereas in August 2021, the market is telling producers to store. Furthermore, we can observe that prices are to remain stable for the next 7 years as of today. 

Market pressure points:

According to the NGSA, there are mainly 5 types of market pressure points that can influence the price of Natural Gas and thus LNG. Economy, Weather, Demand, Production, Storage are variables that have influence on market pressure. For this winter the forecast on average predict a upward market pressure in the U.S due to the following factors:

Economy: is a vital factor that influences the LNG market. For the current year, the GDP is expected to decline to -2.6 percent. Which will have a downward pressure.

Weather: The National Oceanic and Atmospheric Administration predicted an average winter 4 percent colder than last winter in the United states. This factor will affect consumption and put an upward pressure on the market.

Demand: Customer demand forecast an average 109.5 Bcf/day in 2020/2021 compared with 2019/2020 with an average of 110.6 Bcf/day . In global this will have a neutral pressure on the market.

Supply: NGSA, expected the production to decrease by substantial 9 percent. This will result in a higher price due to the fact that there is a lower supply with a constant demand.

Storage: The start of winter inventory is forecast to be 9 percent above the 5-year average with just over 4 Tcf of gas in storage, considerably more than last winter’s 3.7 Bcf levels. Higher capacity storage will result in a downward pressure on the market in the U.S. 

Recommendation:

Since this coming winter market is expected to go in contango with the analysis made by NGSA, we recommend to store now and sell later the commodity. Furthermore, as we are in the second wave of the COVID-19 LNG market is becoming uncertain as every commodity we can only plan for the coming month.

Bibliography:

National Oceanic and Atmospheric Administration, [no date]. [online]. [Viewed 03 December 2020]. Available from: https://www.noaa.gov/

CHUNG, Jane, 2019. South Korea’s LNG imports to fall on new nuclear, coal plants. Reuters [online]. 31 October 2019. [Viewed 03 December 2020]. Available from: https://www.reuters.com/article/us-southkorea-lng-power-analysis-idUSKBN1XA0LJ

NGSA, [no date]. [online]. [Viewed 03 December 2020]. Available from:

https://www.ngsa.org/wp-content/uploads/sites/3/2020/09/NGSA-PowerPoint-2020_2021-Winter-Outlook-for-Natural-Gas.pdf

Reduced LNG demand delays FIDs, 2020. LNG Industry [online]. [Viewed 03 December 2020]. Available from: https://www.lngindustry.com/liquid-natural-gas/09112020/reduced-lng-demand-delays-fids/

UK Natural Gas Futures Curve, [no date]. ERCE [online]. [Viewed 03 December 2020]. Available from: https://www.erce.energy/graph/uk-natural-gas-futures-curve/

Henry Hub Natural Gas Spot Price, [no date]. [online]. [Viewed 03 december 2020]. Available from: https://ycharts.com/indicators/henry_hub_natural_gas_spot_price

By Lyticia Wouguia, Christopher Delfin, Piratharsan Poologanathan

Chinese Market 

The chinese farmers expect the price to rise with the Covid-19. Thus, they prefer to stock the wheat instead of selling at the current price. As stated in the below chart, even though the current fixed price by the Chinese government is 2240 YUAN and the market price is above,consequently chinese farmers prefer to store the commodity. This may be explained by the fact that the australian wheat is about to be banned. In fact many other commodities are already banned and the wheat is expected to be banned at its turn. The uncertainty is quite high and may challenge de traders. As a matter of fact, at least for the other commodity, the embargo affected even for transaction already made. 

Australian future market

It is reported that these past few weeks, Australia is having good weather conditions which makes the production of wheat a lot easier. The table below is indicating that the situation of the wheat futures is normal. Compared to our 1st bulletin, the future market of wheat in Australia does not face the seasonality. In fact, it has a steady increase in the future’s price. This is due to expecting renewed relationships with traditional customers who have been buying wheat from other countries over the past few years because Australia has been facing poor seasons. It is expected that the traditional Asian consumers such as Vietnam, Philippines, Thailand will be actively seeking offers of Australian wheat on account of superior quality relative to other origins.

Australia and Argentina’s export situation

In 2020/2021 the wheat harvest is estimated at 27.9 million metric tons. This represents an increase of more than 84% over the previous season. Australian wheat exports are set at 17 MMT for the 2020/21 season, due to a larger exportable surplus created by favourable growing conditions in much of Australia this season. Western Australia’s wheat production for 2020/21 is about 8MMT, with APW (Australian premium white) and AH (Austarlin Hard Wheat). Argentina is in direct competition with Australian wheat exports and has gained market share in the Asian region over the past two years, not only for wheat but also for other feed grains such as maize.

The latest update from the Buenos Aires office of the US Department of Agriculture has reduced Argentina’s wheat production for 2020/21 to 17.4 MMT. This corresponds to a downward revision of wheat exports to 11.2 MMT, a 15 % drop from the previous year. The decrease in exports can be attributed to lower production due to dry weather (the La Nina phenomenon, which brings wetter than usual conditions in Australia, has the opposite effect in Argentina with drier than usual conditions) but also to increased competition from Australia.

Australian wheat is one of the cheapest in the world, which means that it is well placed to take advantage of strong international demand.

Recommendations

The potential ban from the Chinese government, might increase the price of the local production wheat. Therefore we recommend investing now. The global price of wheat is not likely to be touched by those measures. 

Sources

https://www.barchart.com/futures/quotes/F3*0/futures-prices

https://thediplomat.com/2020/11/chinas-trade-offensive-against-australia-continues-with-ban-on-wheat-imports/

https://gwcexports.com.au/biggest-top-australian-wheat-exporters/#:~:text=Australian%20wheat%20exports&text=Australia%20is%20one%20of%20the,or%20using%20container%20based%20transport.

https://www.world-grain.com/articles/14481-focus-on-australia

https://www.graincentral.com/markets/australian-wheat-priced-to-find-ample-export-demand/

https://www.farmweekly.com.au/story/7002078/australian-wheat-is-some-of-the-cheapest/