In this list
Agriculture | Energy | Electric Power | Energy Transition | Shipping

Commodity Tracker: 4 charts to watch this week

Natural Gas | Energy | Electric Power | Renewables | Oil | Coal | Emissions | Energy Transition

COP26

Agriculture | Shipping | Dry Freight

Platts Dry Freight Wire

Commodities | Electric Power | Electricity | Energy | Energy Transition | Emissions | Renewables | LNG | Natural Gas | Oil | Crude Oil

Market Movers Europe, Dec 6-10: Omicron impact hangs in balance; gas markets on edge over Russian supply

Energy | Energy Transition | Coal | Renewables | Emissions

Arbitrage opportunities on renewable carbon credits fade as BCT contract sheds $1.50/mtCO2e

Agriculture | Grains | Rice | Energy | Coal | Thermal Coal | Energy Transition | Renewables | Oil | Crude Oil | Refined Products | Jet Fuel | Shipping | Containers

Commodity Tracker: 4 charts to watch this week

Commodity Tracker: 4 charts to watch this week

Fresh out of COP26 in Glasgow, key stakeholders now start to take in the implications of the deals sealed at the summit, including the key agreement on Article 6. Dry bulk shipping rates in Asia are under pressure, while the agriculture space is keeping an eye on Australia's bumper crop and Europe's sugar prices.

1. Carbon credit market digests final deal at COP26 climate summit

Carbon credit prices

What's happening? Carbon credit prices in the voluntary carbon market have surged 944% in 2021 as companies and governments showed increasing interest as part of goals to reach net-zero emissions targets. Interest in the market had been high ahead of the UN Climate Change Conference, or COP26, in Glasgow, where governments have been aiming to thrash out a deal on Article 6 – the rulebook for international emissions markets.

What's next? Market participants will be digesting the implications of the final agreement on Article 6 reached Nov. 13, which established rules that avoid double-counting of emissions reductions. They also included limitations on pre-2013 credits from the UN's Clean Development Mechanism being recognized under the Paris Agreement. The rules matter because unrestricted imports of older credits could have flooded the voluntary carbon market, undermining the price of credits.

2. Dry bulk freight rates in Asia snap out of bull run

What's happening? After witnessing a robust bull run since April, dry bulk freight rates across vessel segments have fallen steeply on the back of easing China port congestion, falling Chinese steel production and sharp drop in iron ore, thermal coal as well as other raw commodity prices. The S&P Global Platts Cape T4 Index – a trade flow based weighted average of four key Capesize routes – dropped 50.88% from $50,768/d on Oct. 20 to $24,938/d on Nov. 9. Over the same period, the KMAX 9 – trade flow based weighted average of nine Kamsarmax routes – dropped by 29.82%, while APSI 5 – a trade flow based weighted average of five key Supramax routes within the Asia Pacific – fell by 44.33%.

What's next? Given the slowdown in vessels joining the queue, market consensus view is for the freight rates to remain under pressure. However, supply disruptions are expected from time to time given the onset of winter in the northern hemisphere. Better availability of domestic coal in China and drop in steel production would keep a tab on demand to move seaborne thermal coal and iron ore cargoes.

Further reading: Platts Time Charter Equivalent Weighted Averages Indexes – Cape T4 | KMAX 9 | APSI 5

3. Australian wheat export prices on rise amid Russia concerns

What's happening? Australia's wheat export prices have been rising steadily since the beginning of the new marketing year that started Oct. 1, reaching an all-time high on Nov. 11. Prices are surging on expectations of a promising export program for the 2021-22 marketing year and growing quality concerns during the peak harvest season because of wet weather. Prices generally gather pace during harvest season but this year export prices have gained sharp traction. Over the last month, Australia's wheat export prices were up nearly 3% due to strong demand from China and Southeast Asian countries, and a lack of competition from Russia.

What's next? Australia's wheat exports are likely to rise further significantly as Russia, the world's largest wheat exporter, is expected to introduce export quotas on wheat in a move to keep domestic food inflation in check. This comes at a time when global wheat supply is seen dwindling. Apart from government interventions in Russia, declining production in both South and North America have put spot on Australian wheat, bolstering demand for its harvest. China, despite having trade frictions with Australia on several products, bumped up wheat imports from Australia in 2021. Australia is expected to sell more wheat, particularly to the Asia-Pacific region in the coming year.

Further reading: The price of APW Wheat FOB Australia

4. European sugar spot remains high despite harvest progress

What's happening? Low carryover stocks from the previous season, which has tightened the sugar market in the past months, continue to support spot prices despite the harvest progresses and the availability of the new crop. This is also being reflected in the prices in the deficit markets in Southern Europe. Mediterranean Europe prices increased by Eur26/mt on the week to be assessed at Eur609/mt on Nov. 5, crossing the Eur600/mt mark for the first time since April 2017, Platts data showed.

What's next? In this context, S&P Global Platts Analytics expects domestic prices to remain at a high level in the coming months, considering that the market remains tight. The low sugar content means that this season's production won't be as high as originally expected. Moreover, with world prices also at high levels, this will give extra support to domestic values as it will keep the import parity above them.

Reporting and analysis by Frank Watson, Shriram Sivaramakrishnan, Sampad Nandy, Daniel Rebelo.