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Inflation, Global Markets, S&D, Markets & Rain Days Update 04/09/2022

Highlights


The UN reports the world’s food prices increased 13% in March alone. The head of Commodity Analytics and Research of Maritime and Trade, S&P Global, spoke yesterday at Singapore Maritime Week’s Baltic Freight and Commodity Forum (ocean freight executives). He sees a “significant deceleration” of the world’s economy. World GDP is forecast at 3.3% for 2022, down from 5.8% in 2021 and with little improvement predicted for 2023. That’s on the back of displacement and destruction – “two massive blocks” – in Ukraine and Russia’s isolation from the world economy “for years to come”. Price inflation will remain high for 2022. Global CPI inflation is expected to pick up from 3.9%-4% in 2021 to a 17-year high of 6.4% in 2022. Inflation kills demand. This will subside to 3.4% in 2023, but we are still expecting 6% global inflation. That is a big number and many countries, many economies haven’t seen that kind of inflation for decades. Real GDP growth, looking at countries that are expected to grow, will be led by Asia Pacific and the Middle East, which is benefiting from high commodity and energy prices. However, we expect relatively sluggish GDP growth in Europe and Latin America. Kapoor was also bearish on China with an expectation that mainland China’s economy is resuming a long term deceleration in economic growth. In our view China’s GDP growth is likely to fall short of the government’s 5.5% target in 2022. And that will have a negative impact on the country’s demand. Kapoor sees commodity prices retreating in the second half of 2022 and 2023 as demand cools and supply recovers. He makes the distinction that the current commodity shock is not being driven by booming global demand. The current shock which we’re seeing is being led by supply constraints and geopolitical instability, so as that goes over, you will see some of those prices retreating back.

 

The Renewable Fuels Association (RFA) reported a record 814 million gallons of E15 gasoline were sold in 2021, a 61% increase over 2020 and nearly double 2019 sales.


Recent light frosts may reduce the Argentine soybean production.


US Gulf corn basis levels yesterday were down a penny for April and first half May. Soybean basis was 2 cents lower for first half April and a penny lower for last half April thru July.

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