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UN agencies warn that extreme heat is a threat to global food systems
According to a report by the U.N. food and weather agencies, extreme heat is pushing the global agrifood system to the edge, and threatening livelihoods and the health of over a billion people. Heatwaves are getting more intense and longer, causing damage to crops, livestock and fisheries. Extreme heat changes the rules of what and when farmers, fishermen and foresters are allowed to grow. It can even dictate if people are able to work, said Kaveh Zaidi, the head of FAO's climate office. "At its heart, this report tells us that we are facing a very uncertain tomorrow,"?he said. Recent climate datasets indicate that global warming is increasing, and 2025 will be among the hottest years ever recorded, leading to a?increase in severe weather events. Extreme heat increases the risk of droughts, pest outbreaks, and wildfires. It also reduces crop yields when critical temperature thresholds are exceeded. As temperatures rise, the risks increase rapidly According to the report, temperatures above 30 degrees Celsius (86 degree Fahrenheit) reduce yields of most major crops. Zahedi gave the example of Morocco, where heatwaves followed six years' drought. This led to a 40% drop in cereal yields. The olive and citrus harvests were decimated. "These harvests were essentially a failure," he said. Marine heatwaves also become more frequent. They deplete oxygen levels in the water and threaten fish stocks. The report stated that 91% of oceans around the world will experience at least one marine-related heatwave in 2024. As warming accelerates, risks increase sharply. The report stated that the 'intensity' of extreme heat events will roughly double with 2 degrees Celsius warming and quadruple with 3 degrees. Zahedi stated that every degree increase in global average temperatures reduces yields by approximately 6% for the four main crops of the world - maize (?rice), soya (soya beans), and wheat. FAO and WMO stated that piecemeal response was?inadequate' and called for better governance of risk and early warning weather systems to assist farmers and fishermen in taking preventative action. Zahedi stated that if you could get the data into the hands of farmers, they would be able to adjust their planting schedule, what they plant and when they harvest. The report said that adaptation alone was not enough. It argued that the only solution to the increasing threat of extreme heat was ambitious and coordinated actions to curb climate changes. Crispian Balmer reported. Mark Potter edited the story.
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Mercuria warns that aluminium faces a 'black-swan' supply shock
According to Mercuria's top metals analyst, the global aluminium market has experienced a "black-swan" event as disruptions caused by the Middle East war have triggered a supply shock. This will?lead? to major shortages in this year. Around 7 million metric tonnes of aluminium is smelted in the region each year, which represents about 9% of global production this year. Aluminium is used in the construction, transport and packaging industries. Nick Snowdon of Mercuria's metals & mining research said that the scale of supply shock in the aluminium industry is "probably the biggest single supply shock a metals market in post-2000 era". He was speaking at the Financial Times Commodities Global Summit, held in Lausanne in Switzerland. "We're already experiencing a black swan event. He said that no one could have predicted something of this magnitude. The London Metal Exchange rallied on April 16 due to concerns about supply disruptions resulting from the U.S./Israeli war against Iran. Aluminium prices reached a record high of $3,672 per ton, a four-year-high. Mercuria believes the market is likely to face a deficit between now and year's end of at least 2 million tons. Snowdon said that this estimate could be conservative as it assumes an improvement in the near-term alumina flow via the Strait of Hormuz, which will allow some smelters restart production during this quarter. Snowdon stated that the shortfall is compared to about 1.5 million tonnes of visible inventory, and just under 3 million tons total global stock (including non-visible units), leaving the market with limited buffers. He said that if the conflict continues and alumina, which is a key feedstock in the production of aluminium, is not flowing to the Gulf then a larger deficit could be possible. Middle East aluminum cannot be easily replaced. China, which is the top producer in the world, has a 'output limit' of 45 million tons per year, whereas the U.S., and Europe, have very little idle capacity. Snowdon stated that the U.S., Europe and other countries were especially vulnerable to the supply shock due to low stock levels. The Middle East accounted for nearly 22% of the 3.4 millions tons of primary and alloyed aluminum that the United States imported last year, according to Trade Data Monitor, an information provider. According to Trade Data Monitor (an information provider), the Middle East imported nearly 22 percent of the 3.4 million tons of primary and alloyed aluminium that?U.S. According to TDM, Europe imported 1.2 million tonnes, or 18.5% of its primary and alloyed aluminum from the Middle East in 2017. The premiums paid over the LME price of physical metal have also risen. In the U.S., they reached a record of $1.14/lb, or $2,521.50/ton, and in Europe, they hit a four-year high at $599/ton, early in April. (Reporting and editing by Paul Simao; Additional reporting by Tom Daly, Polina Devitt, and Pratima Dasai)
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Ferrexpo, a miner, is seeking at least $100 Million to avoid bankruptcy as the Ukraine war affects operations
Ferrexpo, the iron ore pellet manufacturer, said that it would be pursuing an equity raise of at least $100 million in order to stave off bankruptcy. It warned it only had enough cash to last until August's end without additional funding. Early trading saw shares of the London-listed company fall 5.5% to 40.80 pence. The Ukraine-focused mining company said that its net cash available had fallen to about $20 million as of April 17 compared to $101 million by 2024's end, due to the disruption caused by the Ukraine War. The company stated that without the fundraise "it is highly likely" that the company will have to file for bankruptcy in the'relevant jurisdictions, and the shareholders could lose their entire investment or a substantial portion. Ferrexpo also said that it expected to have its shares suspended from trading and listing in May if they did not launch and complete the fundraise by April 30. This is because it would not be able to publish its 2025 annual report, which was already delayed. The company's finances have been severely affected by the suspension of refunds for value-added taxes, combined with attacks against Ukraine's power grid. Ferrexpo?is operating only one of its pellet lines at a capacity of about a quarter compared to pre-war. The first-quarter production dropped 72% compared to last year. Ferrexpo Poltava Mining's main mine has been in bankruptcy proceedings for the past few months. A Ukrainian court had accepted a claim of?4.73bn hryvnias (?107.87m) relating to disputed surety contracts with a former bank owned by Kostiantyn Zhevago, founder and Ukrainian billionaire.
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After US extended ceasefire with Iran, gold rises and oil falls
Gold prices increased?on Wednesday, as lower oil prices, following an extension of a U.S. ceasefire agreement with Iran, eased concerns about inflation and high interest rates. Gold spot rose 1.1%, to $4,762.22 an ounce as of 0615 GMT after Tuesday's fall to its lowest level since the 13th April. U.S. Gold Futures for June Delivery gained 1.3% to $4.781. Donald Trump, the U.S. president, said that he would extend indefinitely the ceasefire agreement with Iran so as to facilitate further peace talks. This was just hours before its expiration date. Trump's unilateral announcement was confusing, as it wasn't immediately clear if Iran or U.S. allies Israel would agree to extend a ceasefire that began two weeks earlier. Edward Meir, Marex analyst, said that the markets perceive a reduction in the tensions with this extension of the ceasefire. If the ceasefire is broken and hostilities are resumed, the dollar will strengthen, and oil and interest rates will rise, which should put pressure on gold prices. Following the extension of the ceasefire, stocks rose, the dollar weakened and oil prices fell. Inflation can be fueled by higher crude oil prices, which increase transportation and production costs. Gold is considered a hedge against inflation, but high interest rates can make yield-bearing investments more attractive, which reduces the appeal of bullion. Standard Chartered analysts said in a recent note that "price action is still at the mercy Middle East ceasefire headlines, and liquidity requirements." We continue to expect that (precious-metals) prices will recover, and in particular gold to "retest" record highs. Kevin Warsh, the nominee to be the Federal Reserve's chief, said on Tuesday that he made no promises about interest rate cuts to Trump. He was trying to assure U.S. Senators who were deciding whether to confirm him to head the central bank, that he would work independently of the White House and pursue broad reforms. Silver spot rose by 2.2%, to $78.38 an ounce. Platinum gained 2.1%, to $2,079.64. Palladium jumped 2.6%, to $1,573.34. (Reporting and editing by Noel John, Bengaluru. Mrigank Dhaniwala, Eileen Soreng and Ronojoy Mazumdar.
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Leaders of South Korea and Vietnam to meet in Hanoi as Hanoi seeks investment in high-tech
To Lam, the leader of Vietnam, will meet with South Korean President Lee Jae Myung, on Wednesday. This is their second meeting in less than one year. Hanoi wants to get more support from South Korea for its high tech ambitions. Vietnam, which is a major exporter for phones and electronic goods, wants to shift to more advanced technologies, such as semiconductors. South Korea, with its accumulated capital, is the largest foreign investor in Southeast Asia’s fastest-growing economy. The Samsung Group, which includes the chip giant Samsung Electronics, is the most significant corporate investor, with more than $20 billion, mostly in electronic goods factories. Local media reported that Seoul would pitch Korean firms for roles in state-led projects such as nuclear energy, the Dong Nam New City Development and the Gia Binh Airport. Local media reported that Seoul also views the 'visit' as an opportunity to increase access for Korean agricultural and cultural products. The leaders will also discuss the development of relations in key areas, such as global supply chains and critical minerals. Lee, who met Lam last in August, will be travelling to Hanoi after visiting India with a large?delegation of business people. He is expected to have two days worth of meetings. A dozen or more government agreements of cooperation are being planned, and the goal to increase bilateral trade to $150 billion dollars by 2030 will likely be reiterated. According to the Vietnamese government, trade grew 9.6% to $89.5 billion last year. CHIPS AND Ai Local media reported that Vu Ho (Vietnam's ambassador to South Korea) said, ahead of the visit, that bilateral cooperation should be focused on high-tech sectors, like semiconductors and artificial intelligence. Multiple sources familiar with these discussions claim that Samsung has been talking to Vietnamese authorities about the possibility of a back-end semiconductor plant for many years. Intel, Amkor, and other multinationals operate large?chip factories in Vietnam that are primarily focused on the labour-intensive assembly, testing, and packaging of semiconductors. Hanoi's attempts to attract foreign investment into?more sophisticated plants for chip production (known as fabs) have not yet yielded any results. Kwak Sungil is the executive director of the Korea Institute for International Economic Policy. He said that South Korean companies active in Vietnam's electronic sector could expand their joint training programmes to help build "the talent base" needed for Hanoi’s industrial ambitions. He added that this would also help to ease the labour shortages faced by South Korean manufacturers. Kwak stated that a deeper cooperation with South Korea will also help to?localise part production, train skilled employees and reduce 'vulnerability to external pressure. Hanoi is under pressure from Washington to reduce its reliance on Chinese electronic components. Washington has increased scrutiny in recent months to see if Chinese goods are being shipped through Vietnam to avoid U.S. Tariffs.
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After US extended ceasefire with Iran, gold rises and oil falls
Gold prices rose?on Wednesday, as lower oil prices, after a U.S. extension of a ceasefire agreement with Iran, eased concerns about inflation and high interest rates. Gold spot rose 0.9%, to $4,754.89 an ounce at 0435 GMT after Tuesday's fall to its lowest level since the 13th of April. U.S. Gold Futures for June Delivery gained 1.1% to $ 4,772.60. Hours before the ceasefire was due to expire, U.S. president Donald Trump said he would extend it indefinitely to allow for future peace talks. Trump's unilateral announcement was confusing, as it wasn't immediately clear whether Iran or Israel, the U.S. ally, would agree to extend a ceasefire that began two weeks earlier. Edward?Meir, Marex analyst, said: "With this ceasefire extension, the markets perceive that the crisis has de-escalated." If the ceasefire is broken and hostilities are resumed, the dollar will strengthen, and oil and interest rates will rise, which should put pressure on gold prices. Following the extension of the ceasefire, stocks rose, the dollar weakened and oil prices fell. Inflation can be stoked by higher crude oil prices, which increase transportation and production costs. Gold is seen as an inflation hedge but high interest rates make yield-bearing investments more appealing, which reduces the appeal of bullion. Standard Chartered stated in a recent note that "price changes are still at the mercy Middle East ceasefire headlines, and liquidity requirements." We continue to expect that (precious-metals) prices will recover, and in particular gold will retest records highs. Kevin Warsh, the nominee for Federal Reserve chairman, said on Tuesday that he made no promises about interest rate cuts to Trump, in an attempt to reassure?U.S. Senators considering his nomination to lead the central bank will want to know that he will act independently from the White House and pursue broad reforms. Silver spot rose by 1.7%, to $77.97 an ounce. Platinum gained 1.7%, to $2,070.37. Palladium was 1.9% higher at $1,561.72. (Reporting and editing by Eileen Soreng, Mrigank Dhaniwala and Noel John from Bengaluru)
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USTR Greer asks US allies for more money to buy critical minerals
The Financial Times reported that U.S. trade representative?Jamieson G. Greer told American allies to 'pay more' for critical minerals sourced outside of China. Greer, in an FT interview, said that U.S. allies would have to be willing to pay a premium for minerals that are sourced within a group of?trading partner countries, including Europe. Greer said in an interview that "there is a security premium we all pay. I call it the national security fee. We will pay this premium to have a safe supply chain." Greer, who has been drafting a draft of detailed information to share with partners said that he blamed the fixation on costs on Western countries' reliance on China as a source for key minerals. Greer explained that when trading partners express concern about the economic costs of price floors or mechanisms they should say: "What you're talking about is cost 'efficiency. This?is the reason we're where we are." Greer said earlier that there should be a price mechanism for rare earth minerals. The U.S. is attempting to gain?access? to vital mineral reserves. (Reporting and editing by Christian Schmollinger, Muralikumar Anantharaman, and Chandni Shah in Bengaluru)
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MORNING BID EUROPE - Indefinite ceasefire and markets unbothered
Ankur Banerjee gives us a look at what the day will bring for the European and global market. An indefinite ceasefire in the Middle East, which may or may not be agreed upon by all parties, but is expected by the markets?will likely keep April's risk momentum intact. This will allow investors to concentrate primarily on corporate earnings and economic statistics. Donald Trump, the U.S. president, appeared to announce unilaterally a ceasefire agreement extension hours before it was set to expire. However, it is unclear whether Iran or the U.S. ally Israel have or would accept the new arrangement. Trump said that he would blockade Iran's shores and ports, which means traffic in the Strait of Hormuz has?effectively come to a halt. Brent crude is now hovering around $100 per barrel. Oil prices have dropped from their March highs on the back of growing optimism about a peace agreement, but as long the waterway is closed there will be a risk of higher energy prices and inflationary shock. This brings us to the most important?economic data for the European day. The British inflation report will provide the details on the impact of the Middle East war locally. A poll of economists showed that it is likely to show an increase in inflation from 3% to 3.3%. The earnings of Elon Musk and Texas Instrument, a U.S.-based chipmaker, will be important to understand how companies are dealing with the changes in energy and supply chain. Musk's SpaceX, which has been grappling with?that?, has seen a number of developments in the past week as it barrels towards what could be the largest IPO ever. Share prices will likely continue to rise, as they have already recovered all losses from March. U.S. Stock Futures?were up by 0.5%, while European Futures indicated a subdued opening. The AI theme has returned to Asia and is driving South?Korean stocks, as well as Taiwanese shares, to new highs. South Korean chipmaker SK Hynix, for example, now ranks among the 20 most valuable companies worldwide. The following are key developments that may influence the markets on Wednesday. * UK CPI and PPI March The Eurozone consumer confidence index for April
Mike Dolan: ROI-Warsh’s impossible mission is to tame inflation and please Trump.
Kevin Warsh believes that the Federal Reserve will be successful if no one talks about inflation. The Fed nominee is unlikely to be able to please President Obama anytime soon in order for him achieve this goal.
Trump reiterated his position on interest rates just over an hour before Warsh's confirmation hearing began in the?Congress. He told CNBC that he would not be happy if the Fed Chair?didn't lower borrowing costs as soon as she took office.
Warsh was grilled by the Senate Banking Committee for more than two hours. He defended Fed independence and insisted that Trump never asked him to make a rate commitment.
Warsh faces a difficult task to meet his own definition of "price stability" before the end of the year, even with all his "regime-change" rhetoric, data analyses and balance sheet rethinks. Warsh, channeling the former Fed chief Alan Greenspan’s view of inflation targeting, defined price stability - one of the two congressional mandates of the central banks - as a "rate of price change no one is talking"
Greenspan's target of 2% is the level at which changes in prices no longer influence the decisions made by households and businesses.
Warsh stated that the economy is close to being at full employment.
It may take months to calm down the concerns of businesses and households about rising prices, especially after an oil shock has already sent headline inflation surging higher than it's been in two years and by more than one percentage point.
The Fed's core inflation gauges were already one point over target even before the Iran War began. Few Americans will stop talking or acting about inflation in the months ahead.
According to the latest University of Michigan poll, consumer expectations of inflation in the coming year have risen by a full percentage point this month. This is the highest level they've seen in seven months. ISM surveys also show that businesses recorded their highest input costs last month since the inflation surge of 2022.
According to the Ipsos rolling poll, Trump's approval rating for his handling of cost of living is 26% - his lowest reading ever.
The U.S. does not, by any standard,?experience price stability. If "nobody talking about it" was the goal, then we're a long ways from that.
STOP THE TALKING
Warsh's statement was a bit throwaway. However, his wider testimony provided a more detailed look at how he viewed the economy and the reform of the Fed, allowing for more flexibility than the blunt definition suggested.
The new Fed chair who will take over from Jerome Powell if confirmed next month spoke about examining issues in the collection of inflation data, a possible artificial intelligence productivity wave and pre-emptive policies. He also talked about a gradual reduction of Fed's huge balance sheet, which could give more room to cut rates.
It would be almost absurd to start his tenure by reducing rates, even if the workers and businesses were clamoring about price increases.
The markets have understood this - at the very least, since the recent oil price shock. Futures pricing gives a less than 50% chance of a Fed cut in this year. A further reduction is not fully priced-in for at least a 12 month period.
Investors who bet that a Trump appointed Fed chief would deliver on the White House's demands have seen their clouds darken. Warsh's focus on the balance sheet during his hearing only tightens things up at the margins.
Trump will be very disappointed by all of this, not to mention in the middle of an election year.
Warsh said that, "inflation, even if it is not explicitly stated, is a choice, and the Fed has to take responsibility." He added that the government is entitled to express its opinions. "Fed Independence is largely in the hands of the Fed."
Some people disagree, especially given the legal case brought against Powell. The current Fed Chair himself claims that the case is a "pretext", to force him to cut rates even further.
Claudia Sahm, a former economist at the Fed, was even more blunt in her writings on Tuesday. She wrote that "Warsh’s platitudes ignore current reality." Trump's pressure is beyond words.
She wrote that "central bankers who oppose Trump's views about interest rates don't need to "be strong enough to listen", but they do need to have enough money to pay the legal fees for cases brought against them as retaliation."
Warsh's honeymoon could be short-lived if he cannot convince Fed colleagues to accept?his new vision of the central bank or stop Americans from talking about inflation.
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(source: Reuters)