- Trump has signed an executive order which weakens rules regarding environmental reviews and restrictions on government-funded infrastructure projects. The change is likely to mean that the process to get permits for projects such as energy generation, electricity transmission and pipelines will speed up.
- Analysis by The Conference Board (a global, independent business membership and research association) indicates that the immediate impact of any trade war between the US and China would be worse for the Chinese economy. Long-term however would see the collateral damage from an “all-out” trade war negatively impact both the US and China.
- France’s President Emmanuel Macron is celebrating his 100th day in office at a time of a growing economy for his country, but fall in popularity from over 60% to 36% since he was elected.
- As the GBP hovers around its 100-day moving average ($1.287), HSBC believes the pound is likely to move lower (towards $1.25) over the coming weeks. Not as a result of USD strength (US currency is in a “waiting game” ahead of the US Federal Reserve’s September and December meetings), but predominantly as a result of the continued deterioration of UK economic news and increasingly challenging politics as Britain’s negotiations with the EU over the terms of its exit from the EU come into renewed focus once October’s German elections get “ticked off” Europe’s political calendar.
- EUR hit its strongest level in 8 years against GBP last week as a result of a flurry of better than expected eurozone economic indicators (PMI data), and declining productivity and political uncertainity inflicted by Brexit in the UK. The Euro hit €1.0867 per pound on Wednesday, and was also pushed stronger against the dollar rising 0.2% to $1.1782.
- According to a new report by the Organisation for Economic Co-operation and Development (OECD), the food and agriculture industry needs to urgently improve its energy efficiency. The report highlighted that the dependence of a proportion of EU farms and factories on fossil fuels contributes significantly to greenhouse gas emissions.
- Following cyclone Enawo which hit Madagascar back in March, the price of vanilla has surged as the top producer of vanilla pods, supplying about half of the world’s output, struggles to meet demand from ice cream makers who are rushing to secure supplies
- This year has seen the price of vanilla (which is not traded on an exchange) reach a record high of more than $600/kg, forcing London ice cream chain Oddono to take vanilla ice cream off its menus, and pushed larger companies to raise its prices.
- The price of the spice has risen in recent years as large food companies aim to fulfill their pledges to move away from using synthetic flavouring.
- At current prices, the vanilla market is worth about $1.3bn a year and although Indonesia, Mexico, Papua New Guinea and the Comoros islands are also suppliers, they have not been able to make up for the decline in supply.
- Chicago’s futures markets currently indicate crops will be large for a fifth consecutive year
- Corn and wheat for December delivery has fallen 8.5% to $3.60 a bushel and 18% to $4.29, respectively.
- The price of soyabean oil jumped as much as 2.7% to 35.01 cents a pound on Wednesday following the US governments preliminary ruling that Argentina and Indonesia were subsiding their biodiesel exporters
- In 2016, the US imported just under 2m tonnes of biodiesel, 80% of which came from Indonesia and Argentina.
- The final decision is expected in November and could result in backdated duties being imposed which would make biodiesel imports more expensive leading to increased demand for domestic supply which could in turn result in the depletion of US soya oil inventories by 500m lbs to a 20-year low in 2017/18, driving soya oil prices up 15-20%.
- According to the International Grains Council, with global grain consumption predicted to hit a record high of 2.09bn tonnes in the 2017/18 crop year thanks to continued low prices, total grain inventories could fall for the first time in 5 years.
- Canada has said that the next few weeks will be crucial in determining whether or not the ongoing lumber dispute with the US could be resolved. 2017 saw the US Commerce Department impose anti-dumping duties on import of Canadian softwood lumber following US producers claimed that much of the wood cut in Canada was subisdised. Both side hope to resolve the dispute before talks to renegotiate the North American Free Trade Agreemend (NAFTA) opened last week, but little progress has been made.
- Agroconsult initially expected beef exports from Brazil, the world’s largest red meat and poultry exporter, to rise by 20% in 2017. This estimate has however been reviewed following the scandal in June which resulted from evidence that health inspectors had been taking bribes to approve sub-standard meat. The scandal resulted in key markets including China and the US temporarily banning imports of beef and poultry from Brazil. The new estimate is now no longer a 20% increase compared to a year ago, but instead just half this at a 10% increase to 1.5m tonnes.
- The National Coffee Board, Peru’s main coffee association, believes that Peruvian farmers are likely to harvest 300,000 tonnes of coffee this year, that’s 13% more coffee in 2017 than in 2016. Although Peru’s coffee production still lags behind its neighbours Columbia and Brazil, Peruvian coffee does well in the niche sector of organic and speciality coffees.
- Last week saw the price of gold flirt with $1,300 a troy ounce for the first time since November. The buying of golf futures contracts has surged a record $19bn over the past month as a result of concern over geopolitical tensions with North Korea.
- Industrial metals are higher almost across the board
- London zinc rose to $3,125 a tonne amid expectations for a large market deficit this year, having hit $3,180.5, its highest price since October.
- London copper hit a fresh 3-year high of $6,649 a tonne in London before pulling back slightly to hold at a near 3-year high of $6,586.
- The price of Chinese aluminium is closing in on a 6-year high today (rising as much as 3.2% to $2,500 atonne) following the announcement from Beijing that capacity in northern China is to be cut this year in an effort to reduce air pollution; this year has already seen the closure of unlicensed producers at a rate which has exceeded market expectations and JP Morgan analysts believe prices could rise a further $100 per tonne in Q4 as demand growth outpaces capacity growth going forward.
- Ford is in talks to launch fully electric cars in China as it tries to play catch-up to international rivals in the race to develop battery vehicles. This is further indication of the certainty the demand for lithium for lithium-ion batteries is going to increase over the coming years.
- BHP Billiton has announced its plans to extend the life of Spence, its Chilean copper mine, by more than 50 years in order to capitalise on growing demand as a result of the need for copper for wiring in electric cars and renewable energy projects. Investment will include the construction of a desalination plant and a 154km pipeline to bring water from the coast to the mine which is 1,700m above sea level.
- IPPR North, the ‘think tank’ dedicated to the north of England, has highlighted its concerns that a hard Brexit which includes withdrawal from Euratom, would threaten the North of England’s energy security, fuel price stability and green energy economy initiatives. The concern is that withdrawal from Euratom will mean the UK will need to develop its own new set of complex framework which could take time and stall progress.
- The UK ceramics industry is calling for urgent action from the government to scale up the UK’s gas storage capacity emphasising the importance of protecting British industries and consumers from higher and more volatile gas prices.
- According to scientists from Heriot-Watt University, the UK’s geology is not suitable for effective fracking due to the structural complexity of the UK’s shale resources. This however has not stopped Cuadrilla from starting to drill a pilot well at a fracking site in Lancashire.
- Ofgem has threatened to cut the revenues of power distribution network operators by almost £14m if they do not improve customer service.
- Oil traded sharply higher on Friday (Brent and WTI rising 3.7% to $52.92 and 3.5% to $48.74, respectively) as market participants rushed to cover short positions.
- A surge in Chinese demand this year has helped prop up the oil market, enabling prices to recover from the $30 mark which was seen early last year. There are concerns however that this support of the global crude market may not last; it is believed that much of the oil imported into China is earmarked for the country’s Strategic Petroleum Reserve (SPR) which China has been growing in order to cushion the world’s second-biggest economy from future energy shocks. There are concerns however that this stockpiling may soon slow or even completely stop, which would lead to hundreds of thousands of barrels of crude being freed up, in a market which is not prepared to absorb it.
- After achieving their best day in over a month on Friday 18th, last Monday saw oil prices come under pressure with Brent falling 2% to $51.68 and WTI down 2.3% to $47.39. The drop follows the release of data from the Commodities and Futures Trading Commission released on Friday which indicated that hedge funds and money managers were cutting their bullish bets on US oil for the second consecutive week. Prices were also pressured by assumptions that the domestic US production could soon reach record highs.
- According to the latest data from the US energy department, US crude inventories dropped by 3.3m barrels during the week ending August 18, just 0.05m barrels more than predicted by Bloomberg, but far less than the nearly 9m barrel decline recorded the previous week.
- Despite US oil inventories falling for 8 weeks in a row to the lowest levels since the beginning of 2016, the slow rate of new drilling rigs being added and demand in US summer driving season surpassing expectations, WTI prices have still slumped to its widest discount to its Brent in 2 years. This means that US producers are earning up to 8% less per barrel than producers in the North Sea or west Africa.
- WTI is likely to come under further pressure in the coming months when 14m barrels are released from the US Strategic Petroleum Reserve (SPR). The Brent-WTI spread is likely to further widen as the SPR barrels hit the market, especially because supplies in the North Sea have tightened over the summer as producers carry out maintenance.
- Some analysts are increasingly believing that the only way to slow the shale boom is to abandon OPEC supply cuts and let the price fall and that this is likely to happen if OPEC becoming increasingly less keen to keep cutting its own output as US production continues to fill the gap.
- Gasoline and crude oil prices rose on Friday ahead of the anticipated Hurricane Harvey which is expected to hit key US energy production regions. If he makes landfall Harvey could be the first to hit the US Gulf since it became a major exporter of refined products and, most recently, crude oil.
- The Swiss Federal Council has approved a deal to link the Swiss carbon markets to those of the EU.
- New statistics from the Association of Issuing Bodies (AIB) indicate that the European demand for green power has risen by 39% since this time last year.
- The EU has approved plans for a network of refuelling and recharging stations for low emission vehicles in the Czech Republic. The move is expected to encourage a significant uptake of vehicles running on alternative fuels and help the country reduce emissions, improve air quality and achieve the goals of the Paris Agreement.
- India’s state-run energy efficiency unit has floated a tender to procure 10,000 electric vehicles and 4,000 chargers for a range of energy-related government ministries.
- The US solar industry struggled following the potential action from Trump’s administration threatening tax incentives, but the sector rallied in the early summer as more US states decided to embrace more supportive policies. The sector however is now facing renewed threats in the form of tariffs on solar panels which could be disruptive to the industry, especially those involved in silicon (as opposed to film technology) based panels.
- A study by the US Department of Energy has concluded that it was not a “war on coal” instigated by the Obama administration which caused the shutdown of US coal-fired and nuclear power plants in recent years, but instead competition from cheap natural gas. The report also found that the rise of using gas for power generation had held down wholesale electricity prices in the US which helped consumers but hurt other types of generation. The study’s eight recommendations include working with state regulators and grid operators to improve pricing, supporting workforce development in the electricity industry and calls for the government and businesses to promote research and development of technologies to improved reliability.