For the last few years, we have been highlighting political risk or geopolitical risk as a key risk in commodities. As I sit here not 400 miles from a major European war, I can’t help but reflect on this and underline what we have been pointing towards all this time. The price of everything is sky rocketing driven by massive rises in energy costs and by supply chain disruption. As an article I just read and posted in the news section of CTRMCenter, points out, Russia and Ukraine account for 30% of the world’s grain and their exports have ground to a halt. Meanwhile, European gas prices have surged while the price of oil is now at eye popping heights and reflected in an unprecedented 50CZK per liter in local gas stations (it was 36 a week ago). Also, as the article points out, raw materials are increasingly being used as political tools for presumed leverage – sanctions, tariffs and so on while in the background there, an energy transition is taking place that is also serving to switch demand from one group of commodities to another – also in short supply (oil to metals). All of this is placing… continue reading
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