This week’s edition has a heavy focus on food, with rising beef costs weighing on the start of barbecue season in the Northern Hemisphere, ongoing tensions over the safe-grain corridor in the Black Sea and tightening supplies of rice — a staple in Asia — due to food security concerns and poor weather. Here are five notable charts to consider in global commodity markets.
Beef
With the official start of summer coming Wednesday, it’s a good time to take tabs of your grilling budgets — and it’s not looking favorable. US ground beef prices are on the rise, climbing 2.1% in May to $5.35 per pound — just 10 cents shy of the peak set in August, according to Bureau of Labor Statistics data released last week. Meanwhile, cash cattle costs soared to a record earlier this month as ranchers reduced herds amid drought in the Plains and high feed costs. American consumers are further squeezed by broader inflation pressures, with grocery prices edging up last month after falling for two straight periods.
Grains
Mounting concerns over dry weather and the possibility that Russia may withdraw from the deal that allows Ukraine to safely ship grain from Black Sea ports will add to volatility in the market. The pact, which was extended for two months in mid-May, has enabled the shipment of 31.9 million metric tons of crops since it was brokered by Turkey and the United Nations last July, but exports have been slowing due to vessel inspection disruptions. Even so, Russia is on pace to export record volumes of wheat this season, which may tame price inflation. Wheat futures in Paris slipped 0.2% on Monday after advancing 1.8% last week. Chicago wheat futures gained 11% last week, mostly due to drought worries. Meanwhile, corn futures in Chicago soared 13% over the five-day period.
Rice
Global rice shipments have slumped to an almost three-year low on dwindling exports from India, a major seller that has placed restrictions on its sales for food security reasons. About 2.1 million tons of the Asian staple grain loaded from ports worldwide in May, the smallest volume since August 2020, according to maritime data provider Shipfix, and have shrunk further since. That will test stockpiles of importing countries this year. Countries have been building buffers, but may not be able to secure plentiful new supplies as the El Niño phenomenon reduces output from other rice-planting nations.
Oil
Petrochemicals are set to account for more than 40% of oil-demand growth through 2028, according to the International Energy Agency. Naphtha, used to make plastics, is set to lead the way — partly due to the expansion of production facilities in China. While jet fuel usage is also poised to increase, it won’t recover beyond 2019 levels until 2027 due to substantial improvement in aircraft efficiencies. Such innovation isn’t expected for the petrochemical industry.
Battery Metals
Lithium is an indispensable metal in the making of electric vehicle batteries. Used in the cathode electrode, lithium is the highest-value material in the battery supply chain, accounting for 65% of total costs, according to Credit Suisse. Executives, investors, bankers and manufacturers will convene in Las Vegas this week for the three-day Fastmarkets Lithium Supply and Battery Raw Materials Americas conference to discuss the state of the industry, dealmaking, supply-chain risks and price volatility, among other things.
--With assistance from Yvonne Yue Li, Ann Koh, Rachel Graham and Megan Durisin.
©2023 Bloomberg L.P.
