Read more about the article Financializing Commodity Markets: Consequences, Advantages and African Case Study

Financializing Commodity Markets: Consequences, Advantages and African Case Study

Africa has a wealth of natural resources, including minerals, agriculture, and energy commodities, which offers an opportunity to harness commodities’ financialization in the continent, a concept that has gained global attention, with debates surrounding its potential benefits and drawbacks. Although the financialization of commodities has been studied in various contexts, including in African countries, challenges such as liquidity constraints and market readiness have emerged as critical impediments to its widespread adoption. This paper examines the existing literature to clarify the positive and negative aspects of commodity financialization, drawing on global examples and specific cases within Africa. By examining best practices and lessons learned, the paper offers guidance on how African countries can navigate the complexities of preparing for and embracing commodity financialization to unlock its potential benefits while mitigating associated risks.

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Read more about the article Os impactos econômicos globais da guerra entre Hamas e Israel

Os impactos econômicos globais da guerra entre Hamas e Israel

A oferta e os preços de energia são os principais canais de transmissão econômica global da guerra entre Israel e Hamas. Os efeitos do conflito nos mercados globais de matérias-primas têm sido limitados até agora. Esse quadro dará lugar a mudanças acentuadas caso o conflito se agrave e se alastre. Para além do efeito devastador sobre vidas trazido por uma extensão e agravamento da guerra, não é o caso de se menosprezar os efeitos sobre pobres e a segurança alimentar e energética no planeta.

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Read more about the article Unpacking the Relationship between Crude Oil Financialization and Volatility: The Tale of Speculative Positions

Unpacking the Relationship between Crude Oil Financialization and Volatility: The Tale of Speculative Positions

This paper explores the impact of commodities financialization on crude oil prices and their volatility. While some commodities have been market movers for centuries, introducing others, such as oil, to the financial markets is more recent. The increase in investors' appetite for commodity investing has led to commodities’ financialization, which is often considered an amplifier of commodity price volatility. This paper focuses on the relationship between crude oil prices and the financialization argument through the commitment of traders undertaking long and short positions on the WTI crude oil to study their impact on spot prices and, thus, on crude oil's volatility. It reviews recent swings in oil prices and the correlation between prices of crude oil and speculative positions in financial markets. It also focuses on the relationship between crude oil prices, speculative positions, and volatility represented by the CBOE Crude Oil Volatility ETF through econometric models. The aim is to bring additional information to the literature on whether commodities financialization, specifically the presence of hedgers on crude oil markets, are linked to the volatility in energy markets. We rely on tools such as correlation levels, the Granger Causality test, Vector Autoregression, and Fully Modified Least Square models to study if additional speculative activity in the Crude Oil market is responsible for adding pressure to oil prices on financial markets. We then conclude with the direction of the link between prices and speculative positions, if investors are shaping the market prices and contributing to higher volatility.

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Read more about the article The parrot says that commodity prices will rise

The parrot says that commodity prices will rise

In 2023, both the demand and supply sides point to upward pressure across much of commodity prices. Not all commodity prices will necessarily move up. As far as energy, metals and minerals are concerned, the parrot is likely looking up at this point; definitely in this case the best thing to do is to mimic the parrot.

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Read more about the article The Global Food Price Shock

The Global Food Price Shock

The world food price index collected for the last 60 years by the United Nations Food and Agriculture Organization (FAO) hit its highest record in March, declining gently in April. Pandemic, war and death in Ukraine, and droughts in the last 2 years… Such a combination looks apocalyptical. Now it is adding global hunger risks, because of the food price crisis. The fiscal fragility inherited from the pandemic limits public programs to deal with issues in many developing countries.

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Read more about the article Por que os preços globais de alimentos estão em choque

Por que os preços globais de alimentos estão em choque

A combinação de praga da pandemia, guerra na Ucrânia e secas nos últimos dois anos parece ter saído da Bíblia. Agora, essa combinação está possivelmente incorporando a fome, com a crise de preços de alimentos, em parte do mundo. O índice de preços mundiais de alimentos, coletado há 60 anos pela Organização das Nações Unidas para a Alimentação e a Agricultura (FAO, em inglês), atingiu seu recorde em março, declinando suavemente em abril. Ninguém pode afirmar estar ileso em relação ao choque de preços de alimentos. Particularmente no caso das economias mais pobres, para as quais a parcela dos alimentos na cesta de consumo é significativa.

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Read more about the article Tempestade armada na economia mundial + Impacto da guerra nos preços dos alimentos

Tempestade armada na economia mundial + Impacto da guerra nos preços dos alimentos

1. Podcast O Assunto: Associada ao aumento de preços com a recuperação da atividade pós-pandemia, a inflação se consolidou como fenômeno global. E leva bancos centrais a decidir por apertos monetários, colocando recessão no horizonte. Dados divulgados nesta quarta-feira nos EUA mostram que a taxa acumulada em 12 meses chegou a 8,3% em abril, perto do maior patamar desde 1981. 2, Canal MyNews: No Cruzando Fronteiras desta sexta (13), Jamil Chade recebe o economista Otaviano Canuto, pesquisador do Policy Center for the New South. Na pauta, o impacto da guerra da Ucrânia nos preços dos alimentos.

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Read more about the article Biggest Commodity Price Shock in Fifty Years

Biggest Commodity Price Shock in Fifty Years

Commodity prices stabilized in April. However, the previous commodity price shock, intensifying trends that have been present since mid-2020, have already led to significantly higher price levels in 2022. The new jumps made the increase in energy prices in the last two years the biggest in the last fifty years, since the oil shock in 1973. The war in Ukraine and the shock of energy commodity prices have not been favorable to the energy transition, as seen in the race for coal.

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Read more about the article Maior choque de preços de commodities nos últimos 50 anos
Feira do varejo de fruta, legumes, verduras, carnes do CEASA, Brasília. Comércio popular. | Sérgio Lima/Poder360 23.abr.2022

Maior choque de preços de commodities nos últimos 50 anos

O choque de preços de commodities, intensificando tendências presentes desde meados de 2020, já as levaram a patamares de preços significativamente mais altos em 2022, devendo permanecer por lá no médio prazo. As perspectivas para os mercados de commodities dependerão, claro, da duração da guerra na Ucrânia, das sanções sobre a Rússia e da gravidade das interrupções nos fluxos de commodities. Para que a combinação de praga pandêmica, guerra e mortes não assuma proporções bíblicas, devemos evitar que a elas se junte uma mudança climática suscitada por mais atraso na transição energética.

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Read more about the article War in Ukraine – Global Economic Impacts

War in Ukraine – Global Economic Impacts

1. OTAVIANO CANUTO Global Impacts of War in Ukraine - a 3-min video summarizes the short-term impacts of Russia's invasion of Ukraine on the global economy 2. Podcast - War in Ukraine and Sanctions against Russia : an endless boxing match? 3. Commodity Markets Outlook, Urbanization & Commodity Demand In partnership with the World Bank

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Read more about the article War in Ukraine and Risks of Stagflation

War in Ukraine and Risks of Stagflation

The war in Ukraine is bringing substantial financial, commodity price, and supply chain shocks to the global economy. Sanctions on Russia are already having a significant impact on its financial system and its economy. Price shocks will have a global impact. Energy and commodity prices—including wheat and other grains—have risen, intensifying inflationary pressures from supply chain disruptions and the recovery from the pandemic. The push toward relative deglobalization received from the pandemic will get stronger. One may expect an increasing weight of geopolitics in international payments and in the access to special commodities.

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Read more about the article Decarbonization and “Greenflation”

Decarbonization and “Greenflation”

Accelerating the transition toward low or net-zero carbon emissions is necessary to keep global warming at theoretically safe levels. That will likely bring price shocks associated with rising metal prices, energy costs, and carbon taxes – what has been called “greenflation”. Greening the economy will also require public spending and redistributive policies.

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Read more about the article Tem pedágio na estrada da descarbonização, escreve Otaviano Canuto

Tem pedágio na estrada da descarbonização, escreve Otaviano Canuto

Preços elevados de metais, taxas sobre o carbono e obsolescência acelerada do capital associado a combustíveis fósseis são pedágios na rota da descarbonização. Levando-se em conta que a descarbonização evitará que ondas de calor, enchentes, furacões, secas, inundações e temporais como os deste ano se tornem ainda mais intensos e frequentes, valerá a pena pagar tais pedágios.

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Read more about the article Natural Wealth and Growth in Sub-Saharan Africa

Natural Wealth and Growth in Sub-Saharan Africa

The conceptual framework of natural wealth that we approached in the previous video may be illustrated with cases drawn from Sub-Saharan Africa. With at least 250 million inhabitants in resource-rich African countries, natural assets are responsible for more than 80% of exports and 50% of government revenues in the region. As such, the high concentration of resource-rich countries in the area allows for direct comparisons with their resource-poor counterfactual regional neighbors. We compare rates of economic growth, poverty reduction, governance, and sources of productivity growth in resource-rich and resource-poor countries. We contrast the landscapes during the commodity boom with the current one during the pandemic crisis.

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