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Buyer's Brief – Crystal Ball-Gazing: A Scorched Earth And A New City

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Buyer's Brief – Crystal Ball-Gazing: A Scorched Earth And A New City

Predicting the future can be a delicate art, particularly in these testing times. Nick Peksa gazes into his crystal ball to uncover what the coming year might have in store. This article first appeared in ESM’s January/February 2024 edition.

Greetings, seekers of wisdom and curious minds! As we scurry away from the smouldering embers of 2023, let’s peer into the mystical crystal ball, and let 2024’s revelations unfold …!

Weather Oracles: A Climate Unravelling

The elements murmur of a tempestuous past, as 2023 bared its scorching fangs. The Earth experienced an unprecedented average temperature of 14.98°C, earning 2023 the title of ‘Hottest Year Ever Recorded’. The entire year was marked by rising temperatures, with each month from June to December surpassing historical averages. 

The Copernicus Climate Change Service (C3S) reveals a rise of 1.48°C – just shy of the 1.5°C threshold set in the Paris Agreement of 2015. When checked against palaeoclimatic data records from sources, such as tree rings and air bubbles in glaciers, 2023 may have been the warmest year in the past 100,000 (see panel opposite).

As we step into 2024, therefore, the oracles warn of unyielding weather trends. The El Niño phenomenon casts its shadow on the Northern Hemisphere winter, with a 60% chance of a transition to ENSO-neutral conditions during April-June 2024. Brace yourselves, for the weather of 2024 may be even hotter than its fiery predecessor.

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Crude Oil Odyssey: Navigating The Waves

Next, let’s dive into the mystic seas of the realm of crude oil. In 2023, underestimated oil demand clashed with OPEC’s efforts to increase prices. Expectations of an economic renaissance in China failed to materialise, casting a shadow on the oil market. 

The forecast for 2024 adopts a cautiously neutral stance. Brent crude oil prices may hover around the $81- to $83-per-barrel mark, reflecting market dynamics and global economic nuances. In the short term, the main risk to crude oil relates to the recent attacks on ships in the Red Sea by Houthi rebels – these attacks may stimulate shipping prices and, consequently, oil prices. 

Plastic Outlook: Resin Riddles Unveiled

Embarking on a journey through the resin market, which is shrouded in challenges, 2023 witnessed a persistent downturn, influenced by economic pessimism, yet the crystal ball whispers stability in 2024. 

Global resin pricing anticipates a steady increase, tempered by macroeconomic pressures. The US presidential elections in late H2 2024 promise a positive movement on global resin prices, however, the spirits of oversupply loom.

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Wheat Harvest: A Bountiful Reckoning

Amidst the dance of commodities, wheat production emerges from a downward spiral. After four years of decline, global wheat supplies look poised for a rebound. Favourable conditions in the US, Russia, Argentina and Australia hint at lifting world ending stocks, yet India’s wheat harvest faces a decline, intensifying the pressure for an extension of its wheat export ban.

Coffee Chronicles: Beans in the Brew

The coffee oracle foretells a saga entwined with El Niño’s embrace. Arabica and robusta beans, influenced by weather conditions and annual cycles, have embarked on a journey of price fluctuations. 

Last year, arabica prices climbed by over 35%, whilst robusta prices climbed by over 55%. Recently, stocks of both arabica and robusta beans held in ICE warehouses have declined to five-year lows. The 2023 recalibration sets the stage for 2024, with climatic whims and geopolitical shifts guiding the destiny of coffee markets.

Olive Oil Odyssey: A Price Surge Unveiled

The olive oil market unfolds a tale of unprecedented highs. Jaén, a beacon in the olive groves of Andalusia, reached €9.00/kg for extra-virgin olive oil – an all-time high. A symphony of factors – from poor yields to low production estimates in Spain, Greece and Italy – contributed to this bullish surge. 

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Global olive oil production in the 2023/24 crop year will likely end up at around 2.407 million tonnes – the lowest total since 2013/14. In the EU, initial production estimates of output for the 2023/24 marketing year were slightly up, however – with the harbinger of extreme weather circling and diminished stocks – 2024 could be a disaster.  

Capital City Shift: Indonesia’s Bold Journey

In response to congestion, overpopulation, and the echoes of climate change, Indonesia has embarked on an ambitious quest. The capital city, Jakarta, which is sinking at an alarming rate, finds refuge in the jungle embrace of Borneo Island: Nusantara, an archipelago of resilience. 

Initiated in 2019, this transformative journey is set to reach its zenith on 17 August 2024, aligning with Indonesia’s Independence Day. Whilst this may not affect any global markets directly, there is potential for Nusantara to boost economic activity in the entire region. 

Ending Thoughts

A celestial alignment – a total solar eclipse will be visible on 8 April in the US, Mexico and Canada – indicates a descent of inflation, granting central banks the arcane power to commence the arduous journey of restoring rates to their mystical normalcy. 

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But, in all seriousness, as we navigate through the coming year, the weather forecast is more than just a casual conversation-starter – it is a stark reminder of the urgent need for collective efforts to combat climate change. I would also like to use the same disclaimer from last year: ‘If anyone can accurately predict the future, would they share it with you?’ 

For more information, contact [email protected].

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