Global Outlook for Commodities: Navigating Uncertainty

Global Outlook for Commodities: Navigating Uncertainty, a Transition Phase where extra risks reside, extraordinary opportunities, as they are happening quietly every day, and big, smart deals.

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The global commodities market faces a complex scenario, with a confluence of factors influencing prices, supply chains and demand dynamics. Geopolitical tensions, climate uncertainties and logistical challenges create a volatile environment, requiring companies and investors to remain informed and adaptable, plan and study well but not hesitate, a saddled horse is before you. Either you mount it or you lose this opportunity forever. Someone else will take your place.

For example, there were cases such as CHS with Raizen Cosan for Santos, the exploration of sylvite to produce Potassium Chloride (KCL), the Autazes Mine (MA) of Canadian bankers Forbes & Manhattan that will be explored already authorized by ANM, Bradesco buying 50% of Banco John Deere, the excellent movements of SLC, Gerdau, Tigre, CSN, Gerdau, the exit of Morro Vermelho by Centaurus Minera??o, and the entry of a new specialist player..., each focused on their specializations, and all with plenty of cash to invest and operate, giving rise to vigorous enterprises that will enter into operation, not mere rights and reserves of value as before.

Therefore, although they never take risks in the dark, they are always based on a robust study and rapid prior planning via professionals who know the business and are correct, selecting very well because there are many occasional opportunists selling cats for hares, and, on the other side, a greedy government that collects money is undermining the forces and cash flow, generating uncertainty.

This will soon pass and our agribusiness is above all. Fear is good, running away is not, doing it well, yes! Oser! As the saying goes: those who decided to wait until things get better will find that those who did not wait (but decided well based on what they know) will be so far away that they will never be caught up.

Markets and their Trends and Current Affairs, the basis of these weekly Newsletters

Sugar and Ethanol: Sweet and Bitter

Volatile prices: Global sugar prices are expected to remain volatile, driven by climate concerns and geopolitical risks. Sugar may trade at levels below 17.00 cts/lb, but the sugar and there's a sliding scale that allows you to produce more sugar or more ethanol, depending on market demand. Currently, there's a strong demand for fuel ethanol of corn or beet and a lower demand for sugar, and so we may shift more towards ethanol, whose demand is firm and will be even stronger, both for Asia and India as well as for Europe, which is ultimately green and sustainable.

Starting January 1st, 2025, your products must hold full ESG Green certification from a leading international entity to be sold in the EU, Japan, and China. This certification ensures sustainability, traceability, and social responsibility throughout your entire supply chain. Failure to comply will be forbidden market access. These new regulations present challenges but also opportunities. Let our expertise in certifications guide you. This is the main concern of the Europeans and others that are importing biodiesel made with palm oil: they will be ready and fully certified accordingly EU directives and law ?

Certify your company , Why not? There is no other alternative and it is easy to do. Talk to us, it is very feasible and cheap.

You have an operational interest in installing electrostatic filters, gaining more operationally and not polluting, and installing EXAL Vacuum columns as Cargill did, which broke this paradigm once and for all.

How about using your own biomass, which is good, beautiful and super profitable? We have the solution that saves you more than 50% of this vital cost; talk to us! Don't become dependent, it's dangerous. Use the options you have and invest well in your future.

Brazil in the spotlight: Brazil, a key player in the sugar market, should maintain strong exports, supported by a favorable exchange rate and efficient production. This exchange rate and these "Robin Hood" to milk cows the cash flow on one side and garroting, killing the manufacturing industry and generating the highest cost of Brazil in the world. Congress must act quickly on this alignment of the Tax Reform and not just on revenue and levies.

Ethanol Demand: Ethanol demand remains robust, fueled by biofuel mandates and high gas prices, especially in the U.S. and Brazil. Trump or Harris will be great for us. We are the largest and most experienced biofuel producers in the world and we know what to fix. And it is profitable, because costs have also fallen and productivity, efficiency and reduced waste have increased.

Price List

Market Comments:

·?StoneX: "Global demand for sugar remains strong, but supply could be affected by extreme weather events."

·?Marex: "The ethanol market is booming, driven by demand for biofuels and rising gasoline prices."

Biofuels and Bioenergy: The Green Wave

Global expansion: Biodiesel, SAF and Qr production is expanding globally, driven by decarbonization efforts and government support, particularly in the EU and the US. And let's go with Shell Cosan, which has all the technology, or Copersucar, in short, to manufacture now and here. SAF and Qr are irreversible and are a great opportunity. We have never hesitated before, what is going on? And political and institutional crises have been part of Latin blood since the barbarians, nothing new. Everything is open and this is not a dictatorship, on the contrary, dialogue and discussions are open, and nothing goes unnoticed.

·?It wasn't quite like this before... Opportunities to put the house in order. Let's do it, more and more, we have a lot of competent and capable people!

Biogas Growth: The biogas and bioenergy sectors are poised for further growth, contributing to renewable energy targets, especially in Europe and China and the USA and Canada, and Australia. Look at these countries, they are full of deserts, they are ahead and winning big. Let's learn from them!

·?Disruption risks: Potential disruptions in oil supply and logistical challenges could impact prices and availability of biofuels. There are many suppliers of safer, more cost-effective and sustainable closed-loop systems in Europe, the United States, Canada and Japan that offer higher yields and lower costs. Contact us to present a comparative solution and you decide.

Price List

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Market Comments:

·?Bloomberg: "The biofuels market is booming, driven by demand for cleaner fuels and growing environmental awareness."

·?Farms.com ?: "Biogas production is becoming increasingly important for generating renewable energy and reducing greenhouse gas emissions."

Vegetable Oils and Brans: A Mixed Picture

·?Pressure on palm oil: Palm oil prices are likely to remain under pressure due to high stocks and subdued demand, especially in India and China. Why wouldn't they make biodiesel from this palm oil, 40 billion liters and overcapitalized...

·?Soon you will hear about giant projects, and there are cutting-edge Brazilians moving back and forth. Capital has no borders and new clean technologies such as pyrolysis are applied to large projects. Just because there was an orangutan revolt 10 years ago doesn't mean it would happen now. Technology has changed and today it is clean and in harmony with nature, everything is certified and in compliance with all the rules. Blacell is great in Indonesia, Chinese and other quiet ones too....

Soybean oil firm: Soybean oil prices are expected to remain firm, supported by strong demand from the biofuels industry, especially in the US and Brazil. Yes, it is time for the jaguar to drink water!

·?Mixed Meals: Meal prices should remain mixed, with soybean meal facing competition from alternative protein sources. No, for Brazilian meal, in these 6 to 9 months, demand will be good, and by-products, those that already have factories, such as oil and meal, will guarantee the best results in these 6 to 9 months... then, today a beautiful farmer told me about big harvests, what we are going to do... Calm down, with profit in our pockets and options, we can talk, this has changed a lot and will change more, we have a lot of fat to cut and costs to trim, do not accept bills that are not in line with world standards... let's fight, there is fat for our Sunday barbecue.

·?Geopolitical impacts: Geopolitical tensions and logistical challenges may further impact the vegetable oil market. We must remain alert and well informed and carefully consider who to do business with or not....

Price List:

Market Comments:

·?Food Navigator: "Demand for palm oil is weak, due to the economic slowdown in China and competition from other vegetable oils."

·?Reuters: "The soybean oil market is buoyant, driven by strong demand from the biofuels industry."

Logistics and Freight: The Bottleneck Persists

Supply chain disruptions: Global supply chain disruptions continue to lead to delays and high freight costs.

Logistics challenges: Port congestion, container shortages and geopolitical events such as the closure of the Suez Canal are exacerbating logistical challenges.

Geopolitical impacts: The Russia-Ukraine conflict and potential disruptions in the Strait of Hormuz could further impact shipping costs and delivery times.

Market Comments:

·?PortEconomics: "The global logistics crisis continues to affect international trade, with high freight costs and delivery delays."

·?Bloomberg: "The war in Ukraine and tensions in the Middle East are increasing risks for shipping and could lead to further supply chain disruptions."

Geopolitical and Economic Risks

·?Conflicts and tensions: The ongoing conflict between Israel and Hamas, coupled with tensions in the Strait of Hormuz, could disrupt global trade routes and impact commodity prices.

·?Impacts of the Russia-Ukraine conflict: The Russia-Ukraine conflict continues to affect agricultural exports, particularly grains and sunflower oil.

·?Market volatility: Upcoming elections in major economies and potential changes in monetary policies may create additional market volatility.

·?Interest rates and currencies: Rising interest rates and currency fluctuations can impact commodity prices and trade flows.

Regional Perspectives

·?Brazil: Well-positioned to benefit from growing demand for biofuels and agricultural commodities, but needs to address infrastructure and logistics challenges.

·?US: Strong in biofuels and soybean oil production, but faces high production costs and potential political changes.

·?China: Major consumer of commodities, particularly palm oil and soybeans, but faces economic slowdown and geopolitical tensions.

·?EU: Focus on sustainability and renewable energy is driving demand for biofuels, but faces high production costs and regulatory hurdles.

·?India: Growing demand for vegetable oils and brans, but faces logistical challenges and dependence on imports.

Export Routes and Logistical Impacts

Impact of disruptions:

Brazil vs. the US: Global logistics disruptions affect both Brazil and the US, but Brazil may be more affected due to its greater dependence on maritime transport and geographic distance from some important markets, such as China.

·?Freight Differentials: Freight differentials between Santos and the US Gulf to Shanghai can vary depending on the type of cargo, vessel availability, and market conditions. However, in general, freight from Santos to Shanghai tends to be higher due to the greater distance.

Daily shipping rates (approximate):

• Santos - Shanghai (Super Max bulk carrier): US$ 30,000 - US$ 40,000 per day
• US Gulf - Shanghai (Super Max bulk carrier): $25,000 - $35,000 per day
• Santos - Rotterdam (Super Max bulk carrier): US$ 15,000 - US$ 20,000 per day

Exchange Rate Volatility and the Brazilian Real: The Perfect Storm

In times of uncertainty, exchange rate volatility becomes the epicenter of financial concerns. “Your capital can fly away in strong winds, while the risk of losses from speculation rides on horseback.” The transition to the digital age, aggravated by pandemics, geopolitical conflicts and growing social inequalities, creates a scenario of unprecedented instability.

The Brazilian Real, like any emerging currency, is particularly exposed. The combination of internal and external factors increases volatility. Add to this the trend towards "de-dollarization" and the search for monetary autonomy of each country.

Large corporations and investors, in search of safety, migrate to more stable assets and jurisdictions, exacerbating volatility in emerging markets.

What to do?

·?Diversification:?Don't put all your eggs in one basket. Diversify your investments, try to have at least one firm stake

·?Hedge:?Use hedging strategies to protect your assets, operate more in the asset market that you know, such as land, for example, a good time to buy.

·?Caution:?Avoid risky speculation in times of high volatility. In short, avoid the dollar and invest in currencies with the Japanese Yen as a borrower and lender in sustainable, traceable and robust investments such as ESG Green factories, food and energy. Diversify your sustainable and traceable portfolio. Create options and alternatives. This is not the time to rush, but to take advantage. The world is big. Don't concentrate or try to manipulate markets. This is also too much of a risk.

·?Information:?Keep yourself very up to date on the economic and political scenario.

Currency volatility is a challenge, but also an opportunity for well-prepared investors. With knowledge, strategy and discipline, it is possible to navigate these turbulent waters and protect your assets.

We can assist you in your analyses, contact us!

About the author

Antonio Iafelice

CEO Consultant | Advisor to the Superior Council of Agribusiness - COSAG/ FIESP | Senior Operational Executive | Expert in Agribusiness | Creation of companies covering all phases of the business

Gliese

https://www.glieseag.com.br/