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Stocks and farm gains over decades strengthen the food system in the face of a'super El Nino'
The global food system is more resilient than ever to the "super" El Nino this year, thanks to the near-record inventories and technological advancements as well as the growth of important exporters like Brazil and Russia. UN Food and Agriculture Organization and analysts claim that since 1980, world farm production has exceeded consumption and population growth. Changes have been driven by the use of higher-yielding crop varieties, fertilisers, improved irrigation, and crop protection. These changes have led to increased yields in staple crops such as rice, wheat corn, and soybeans. Andrew Whitelaw, Australian agricultural consultancy Episode 3, said that even during drought conditions we can still produce marketable crops. The potential impact of global food prices and supplies is real, but because we are better prepared than in the past decades, disruptions will be much less severe. EL NINO GATHERS A FORCE El Nino's dryness has already affected crop planting in large parts of Asia including India, Southeast Asia, and Australia. The Iran War and its shortages of diesel and fertiliser have also increased global food production risk. India is experiencing a monsoon that's not enough, and the weather in Australia's major wheat-growing areas will be drier. Crops across Southeast Asia, such as those in Indonesia and Thailand, also suffer from a lack of moisture. El Nino, already strong, will intensify during the fourth quarter of this year and into early next, according to Chris Hyde, an American-based meteorologist with satellite data?and imagery company SkyFi. The impact of dryness is yet to be felt, even though it's expected to be the strongest ever. El Nino is a weather phenomenon that occurs when ocean surface temperatures warm up in the eastern and central Pacific. It brings rain to the Americas, but dries out much of Asia. In both 1997-98 and 2016-17, El Nino episodes were severe enough to reduce the production of important crops. This led to food shortages and inflation, and also slowed economic growth. After a drought in Brazil, India Indonesia, Malaysia, and Thailand in the years before, sugar and palm oils prices jumped, and tight rice supplies forced Southeast Asian producers into reducing exports. The drought also forced the southern African countries, including Australia, to increase their corn imports. Record inventories Precision agriculture, improved irrigation, drought-tolerant seed, better weather forecasting and near-record grain stocks are all poised to mitigate the impact of this time. Ashwini Bansod is vice president of commodities research at Phillip Capital India. She said that sowing in India has been on track, despite a significant initial delay. Rains in September and August will be critical for maturation and grain formation. India, which exports 40% of the world's rice, is so overstocked that it has exhausted its storage capacity for stockpiles equal to more than an entire year of global exports. China holds nearly half of the ample global wheat stock, as it is the top grain producer and consumer in the world. This reserve should help to curb imports if a drought affects production at Australia's main supplier. The global palm oil stocks are nearing historic highs. However, Indonesia's aggressive Biodiesel program is likely to reduce inventories over the coming months. About 60% of the world's edible oil is palm oil. EXPORTERS RUSSIA BRAZIL Export hubs have emerged in recent decades that were not as common a decade ago. This has resulted in a significant increase of supplies on global markets. Brazil has, for instance, become the world’s largest soybean supplier, with exports more than tripling since 1997/98. Meanwhile, Russia’s wheat shipments increased to 48 million tonnes last year, from around 1 million tons during 1997/98. Researchers have developed drought-tolerant hybrids, which are widely used in Africa and the Americas. They help farmers to maintain their yields when there is erratic rain and periods of dryness. In India and Australia too, heat- and drought-tolerant varieties of wheat have gained popularity. Plant breeding advances have improved plant resistance to heat and water stress, reducing the risk for severe losses due to adverse weather. Short-duration rice helps farmers in South and Southeast Asia cope with the increasingly unpredictable monsoon rainfall. Farmers now have a range of digital tools that were not available during El Nino in?1997-98. These include satellite-based crop monitoring, seasonal climate forecasts, high-resolution maps of soil moisture and GPS-guided fertilizer application. Maximo Torero, FAO's Chief Economist, said that governments have better information and can prepare sooner. "Our forecasting has improved, as well as our market transparency." AI-powered platforms are attracting farmers who want to get timely advice on when to plant, how to use fertiliser, and pest management. Experts warned that wars in the Middle East, the Black Sea and other regions could temper this optimism. Torero stated that "much will depend on the conditions in the second half of the year 2026. This is due to the lower use of agricultural inputs as a result of the Strait of Hormuz Crisis and the higher prices of fertilisers." The Strait of Hormuz was responsible for about a fifth of the world's crude oil and natural gas before it became blocked during the Iran War that began in early February. This caused global fuel and fertiliser supply to be disrupted.
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Merafe profits up 64% as China ramps production
Merafe Resources reported a 64% increase in its half-year profits on Tuesday, as higher prices for chrome ore and sales offset the impact of lower ferrochrome production. Merafe’s headline?earnings were 518 million rand (31.98 millions) for the six-month period ending June 30 compared with 315 million rand in the same period of last year. The revenue from chrome ore rose by 78% compared to the previous period, reaching 1.8?billion Rand. This was due to an increase of 75% in the volume of chrome ore sold compared to the first half last year. Chrome ore prices rose by 11% in the period. The attributable ferrochrome produced by the company from its joint ventures with Glencore fell 75%, to 28,000 tons during the last six months. The main reason for this was the suspension of production at Wonderkop?and Boshoek smelters as well as the partial closure of Lion smelter. Merafe has announced that it will restart Wonderkop and Boshoek in June after the South African energy regulator Nersa approved an a discount on power tariffs for struggling ferrochrome manufacturers. The smelter Lion was able to resume operations in February. Ferrochrome is an iron-chromium-alloy used in the production of stainless steel. It's manufactured in "energy-intensive" smelters. Merafe stated that the outlook for ferrochrome during the second half of the year was dimmed due to a possible glut, a result of increased supply coming from China and weak stainless steel demand globally. South Africa has lost its top position in the processing of chrome into ferrochrome to China primarily due to high electricity costs. The 'South African government intervened with a 54% cut in electricity tariffs to prevent more smelter closings.
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Mike Dolan: Trump reopens Fed fight at critical moment for bond markets
Kevin Warsh, Federal Reserve chair, has been fighting to keep the central banks out of politics. Last week, any hope that U.S. president Donald Trump would grant him breathing space evaporated when the White House targeted Fed governor Lisa Cook. This brought the independence of the central bank back into focus. Trump's renewed effort to remove Cook from her position as Fed chair over unproven allegations of mortgage fraud suggests two things. First, the administration is worried that the Fed may raise interest rates next month. Second, the president knows his appointee will not be able to stop this, even if it was in his best interests. Cook's public pressure could backfire, and she may be emboldened to join 'the hawks' if Trump does not remove her. There is also a possibility that the president will use her as a scapegoat in the event of policy tightening at the last two meetings before the midterm elections. He would counterpunch by saying that any rate increase was politically motivated to disobey him. The futures market sees a roughly 75% chance that a quarter point rate hike will occur by midterms. The main factors are the nearly six-year-long inflationary trend above target and the elevated core prices, along with the Iran-related energy price shock in the last six months. The outcome of the meeting on September 15-16 is viewed as a coin flip. Cook's Friday political jab was probably aware of this. Trump's renewed attempt to remove Cook came in the form of a White House Letter saying that he was "considering". He also demanded a response from her within three weeks regarding what her lawyer has described as "baseless" allegations. This move came despite the June Supreme Court ruling which recognized the Fed's statutory protections but left open the question whether these allegations were grounds for removal. Cook has had a year to clear her name, even with the Supreme Court's pushback. Trump is now giving Cook three weeks to do so before the critical Fed meeting, where each vote counts on the increasingly divided committee. Tim Duy of SGH 'Macro Advisors, chief U.S. economics at the firm, wrote that "the issue of Fed autonomy has not yet resolved." This suggests Warsh may be unwilling or unable of supporting Trump's longstanding push to slash interest rates in response to elevated inflation. Warsh probably wishes that he was given more space to finish his reforms, and to make his policy case both internal and externally. This is especially true given the market's dissatisfaction with his vague inflation target and his preference for less communication. Keeping his distance could prove to be difficult. The Wall Street Journal reported that Trump had called Warsh, the Fed chairman since he took over the top job in May. Trump called Warsh brilliant late last month and blamed his board of directors for not lowering interest rates immediately. The White House seems to have a renewed focus on the board. Duy explained the implications for the markets and economy if Trump is successful. "If Trump wins, and only the accusation and ability to respond are necessary to replace Fed Governors, expect appointees that are willing to lower rates sharply like former Fed Gov. Stephen Miran," Duy stated. As of now, three members from this year's Federal Open Market Committee voted for a rate hike last month. Governors Chris Waller, and Cook voted against it, but both indicated that the Fed might have to tighten up to bring inflation above target back to its long-term 2% goal. If both of them voted for a rate hike next month, then the 9-3 split that was in favor of keeping rates would be 7-5. Jerome Powell, the former Fed chair and Trump's nemesis who is still on the board through his term ending in early 2028, could split the FOMC by voting for a rate hike. A second big question is whether Warsh publicly back Cook as Powell did, in the absence proven guilt. How should the markets react? It is difficult to get a clear picture of the Fed's thinking ahead of this week’s consumer and producer prices inflation reports. These are the two major factors that influence Fed policy. Over the last 18 months, higher long-term Treasury rates and a weaker dollar has periodically appeared during intense bursts in the Fed independence saga. However, it is unclear whether investors view the issue as corrosive. It is best to look at the impact of Warsh's fuzzier inflation targets, combined with the renewed political pressure to fill the board with rate-cutting advocates. This combination could increase long-term inflation premiums on bond markets. Barclays strategists said this week that if July was the beginning of the Fed losing confidence in its willingness to defend inflation targets, then the long term is under-pricing risk. They cited a notable change in the yields on long-dated bonds and inflation expectations following Warsh's latest press conference. The next two weeks are therefore of particular importance, according to us. The Fed's credibility and confidence in the market should be closely monitored to see how much damage was done, if any, to medium- and longterm inflation compensation. Warsh, of course could stamp his independence at the next meeting by voting for the hawks. If this unlikely outcome does not occur, then doubts will be raised about the Fed's commitment to price stabilization and its independence from White House politics at a time when the bond market is vulnerable. The opinions expressed are those of Mike Dolan a columnist at. This column is great! 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Gold falls from two-month high, inflation reports are in focus
Investors focused on inflation data to get clues about the U.S. rate outlook. Gold spot was down 0.3% at $4,374.82 an ounce as of 0548 GMT after reaching its highest level in the session since June 5, $4,434.82. U.S. Gold Futures increased 0.4% to $4435.00. Ahmad Assiri is a Research Strategist for Pepperstone. He said that the move higher in gold's early session trading above $4,400 was primarily driven by renewed flows and a noticeable shift in metal market sentiment. If?this change of sentiment continues to attract more flows, this could be an important factor in determining if gold can 'consolidate around $ 4,400 and possibly extend the recovery toward higher levels. After last week's disappointing July U.S. job data, markets lowered their bets on the Federal Reserve raising rates in September. Three officials dissented in favor of a rate hike at the Federal Reserve's July meeting. Gold tends to be supported by lower interest rates as it pays no interest. If the data continues to show a cooling economy without a meaningful rise in inflation, then markets may reduce expectations of a tighter policy. This would likely make the dollar more vulnerable, and give gold another support. In a 'rhetorical escalation that is likely to complicate efforts to reopen Strait of Hormuz, U.S. president Donald Trump has responded 'to Iran’s conditions for a deal by demanding that Iran pay compensation for those killed in wars, protests and attacks. Silver spot fell by 1.7%, to $64.64, while platinum dropped 0.4%, to $1745.68, and palladium fell 0.8%, to $1372.44. (Reporting and editing by Ashitha Shivprasad, Bengaluru. Subhranshu Sahu, Mrigank Dhaniwala).
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Russell: The surge in China's imports of coal may be starting to slow down.
China's coal exports surged in July to their highest level this year. But the increase is based on short-term factors and will not last. According to data released by the government last week, total coal imports rose 23% from July last year to 43.73 millions metric tons. The increase was from 42.78 millions tons in June and nearly a third higher than the lowest level of?this year, which was 33.1 million tonnes from April. This rebound comes after China implemented safety inspections in mines following an accident that left 82 people in Shanxi Province dead on May 22, China's largest coal producer has historically seen its output fall due to safety inspections. To make up any shortfall, China imports coal to cover the shortage. In June, domestic coal production dropped 9.7% from the same period a year ago to 380.88 millions tons. According to official data, the average daily output was 12.7 million tonnes, the lowest level since July 2025. Official data on production will be released next week. However, reports from analysts in China suggest that output in August could be near the same as in 2025. It is possible that China will start to import less coal from August. Consider that China imports from two main sources: the seaborne and land markets, with a large volume from Mongolia, but also from Russia. About 75% of all coal imported is seaborne, but the share has decreased in recent years as more coal, especially metallurgical, is coming from Mongolia. Analysts DBX Commodities estimate that China's seaborne coal imports in August were 31.23 millions tons, down from 33.91 in July and the first decrease in four months. As more cargoes arrive for assessment, the August figures may be revised. However, it is expected that they will fall below July's total, which indicates that China is less in need of imports as safety inspections decrease. Price Reductions After a rise in prices, seaborne coal has started to level off after China increased its imports during June and July. Indonesia is the largest coal exporter in the world and the top supplier of fuel to China. The price for 4,200 kilocalories per kilogram (kcal/kg), a popular grade with Chinese buyers, has been assessed by the commodity price reporting agency Argus as $62.51 a tonne during the week ending August 7. It was a slight drop from the monthly assessment, which had been $61.77 per ton in July. However, it was 5.1% lower than the $65.89 of June. Electricity demand is also a factor in determining the outlook for China's seaborne coal prices and imports. According to official data, China's thermal production increased by?2.9% from a year ago in the first half of 2026. The majority of thermal generation comes from coal, with only a small percentage from natural gas. China produced less than half its electricity using fossil fuels during the first six months of the year. This is the first time that this has occurred. Government data shows thermal power accounted 49.7% of total. The reduction of solar incentives has slowed down the pace of solar installations. However, wind power will likely ensure that China's share of electricity generated from renewable sources continues to grow. This should lead to a reduction in coal imports over time, particularly if China maintains its domestic coal production levels. This means that months such as June and July when coal imports exceeded?40 millions tons are more likely to be exceptions than the norm. You like this column? Check out Open Interest, your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, who is also an author. (Editing by SonaliPaul)
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Oil prices increase, Asia stocks fall on US-Iran impasse
The oil prices increased on Tuesday, as the negotiations between the United States and Iran on a peace agreement and the reopening of Strait of Hormuz reached an impasse. Meanwhile, Asian shares fell on the back of persistent uncertainty about the outlook for global inflation. Donald Trump, the U.S. president, responded on Monday with his own conditions to?Iran?s terms for a deal. He demanded that Iran pay compensation to those who died in wars and attacks, as well as protests. This rhetorical escalation is likely to complicate attempts to reopen this vital waterway. Brent crude futures climbed to $88.09 a barrel, and U.S. oil futures reached $82.52 a barrel. Both are the highest since July 31. The contracts rose by roughly 5% Monday. Tony Sycamore is a market analyst for IG. He said, "This will be a war of attrition." "You can probably see the (oil market) sitting in the $75-$95 range as we wait to see which party blinks first." Fuel prices have risen again, raising the stakes in the U.S. consumer price report for July due on Wednesday. Expectations are that the headline number will rise by 0.1% and the core reading 0.2%. A?surprise on the upside could reignite bets that the Federal Reserve will raise rates next month. The odds are currently as low as a coin flip. Capital Economics' chief market economist, Jonas Goltermann said: "We believe the risks are skewed in favor of a hot print. This would likely drive a recovery in rate expectations and, possibly, renewed concerns about stagflation." Overall, we remain of the opinion that the U.S. economic situation is a little hotter than "Goldilocks". This indicates higher interest rates." Due to the holiday in Japan on Tuesday, trading of U.S. Treasury bills in Asia was halted. However, futures prices fell, suggesting higher yields. The Reserve Bank of Australia held its cash rate at 4.35% on Tuesday for the second consecutive meeting, stating that the economy is slowing as predicted, but warned they may still raise it again to control inflation. The MSCI broadest Asia-Pacific index outside Japan fluctuated between gains and losses, and ended up at 0.36%. South Korea's KOSPI was also up 1.3% as the latest escalation of Gulf hostilities kept the market sentiment fragile. Nasdaq Futures edged up 0.34% while S&P500 futures gained 0.13%, after Wall Street closed lower on Monday. The futures of the EUROSTOXX50 index were unchanged, while FTSE and DAX futures both edged higher by 0.07%. Nvidia announced that it had partnered with six financial institutions to launch platforms for compute financing, aiming to raise more than $500 billion in third-party capital. This highlights the size of the AI sector's boom. "A small piece of me wondered if this was?how I felt when subprime mortgages first became a mainstream item - the innovation which helped to trigger the GFC," said Sycamore. The Hang Seng Index in Hong Kong fell 0.6% while China's CSI300 Blue-Chip Index declined 0.05%. The yen is back in the spotlight among currencies. It's struggling to stay on the weaker side of the 159 dollar mark and has fallen well below the high of last week of 155.20. This follows several suspected rounds or intervention by Japan and the United States. Nomura analysts wrote in a report that the market is likely to remain vigilant over further U.S. and Japanese yen buying intervention. Therefore, USD/JPY breaking 160 in the near-term seems unlikely. "However,?latest price movement indicates that there are quite a few?USD/JPY dip buyers, after the pair has reached the 156-157 range for the first time since?May." The dollar was boosted by the recent rise in oil prices. This kept the euro from reaching a new high of 1-1/2 months. It traded at $1.1541, and sterling fell from its one-month-old peak to $1.3511. The Australian dollar fell briefly in the wake the RBA's decision, and was down by $0.7049 or 0.07%. Spot gold rose 0.33% elsewhere to $4,402.52 per ounce.
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Australia and Vietnam strengthen strategic partnership
Australia and Vietnam signed cooperation agreements on Tuesday that cover defence, agriculture, and border security. In a joint press release issued during Lam’s official visit to Australia, the two countries also expressed concern over?restrictive?trade practices which disrupt global supply chains. The statement stated that they agreed to intensify their cooperation in supply chains, including areas such as critical minerals, semiconductors, and clean energy. The leaders witnessed the exchange of memorandums of understanding between the Vietnam Coast Guard and the Australian Border Force for cooperation on maritime law enforcement. The Vietnamese government released a separate statement that said another agreement was signed to improve cooperation and mutual assistance between border forces of the two countries. In a joint appearance before the media, Lam and Albanese said: "We are in agreement that in light of rapid and complex changes around the globe, countries must strengthen dialogue, build confidence, ensure safety, freedom of navigation, and overflight and settle disputes peacefully in accordance with International Law." As part of its Indo-Pacific operation, Australia deploys surveillance aircraft and naval vessels in the South China Sea. Australia joined Canada and the United States for a multilateral transit of the waterway in April, where Vietnam, China, and several other countries had overlapping territorial claims. According to the joint statement, bilateral?trade grew 22% annually in the first half 2026 to reach $8.1 billion. Vietnam's major exports to Australia are electronics, smartphones, and garments. It imports Australian coals, minerals, and natural gas. (Reporting from Alasdair pal in Sydney, Additional reporting by Khanh Vu at Hanoi and Editing by David Stanway).
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Indonesia scrambles to contain fires spreading haze
Officials said that Indonesia is intensifying efforts to control forest and landfires in six "priority" provinces. Cloud-seeding planes are being used to create rain to slow down the haze spreading throughout the region. Indonesia faces a 'longer and more severe dry season this year due to El Nino intensifying, increasing the risk of forest fires, air pollution and drought. Forestry Ministry data revealed that from January to the end of June, fires affected 107,465 ha (265,552 acres). This is a massive 110% increase in comparison with 2023 when El Nino was last felt by Indonesia. Djamari Chaniago, chief security minister, told reporters Monday that the weather conditions "really" make it possible for fires to grow. Djamari Chaniago said that there could be signs that El Nino has already reached its highest intensity level in Indonesia. The government has identified six priority provinces: Riau, Jambi, and South Sumatra, all on Sumatra Island, as well West Kalimantan Central Kalimantan?and South Kalimantan in Borneo. Other provinces of the islands?of Java, Papua and Nusa Tenggara have also been affected by fires. The city's mayor announced that classes have been shifted online for all students in Pontianak. This is due to a decrease in air quality brought on by the haze. Djamari stated that 43 helicopters as well as 15 fixed-wing aircraft were deployed to extinguish the fires. Djamari stated that the operations were difficult because there are so few rain clouds. "We closely monitor any changes in weather. "We immediately begin cloud seeding operations whenever something has the potential to produce rain clouds," he explained. According to the Malaysian environmental department, on Tuesday, 11 locations in Sarawak, Malaysia, bordering Borneo Island, had unhealthy air quality. Sarawak's Education Department has also ordered?schools in the state to stop outdoor activities when temperatures are too high, or air quality index readings are above 100. Gatot Soebroto, the head of the local disaster mitigation agency, said that a fire at Mount Bromo National Park in East Java Province, which damaged at least 899 hectares, has mostly been extinguished. On Tuesday, more than 150 people were deployed to extinguish the remaining fire that covered at least 2 hectares.
MORNING BID EUROPE-Middle East deadlock
Rae Wee gives us a look at what the European and global markets will be like tomorrow.
The oil prices rose again on Tuesday, reaching their highest level this month as Washington and Tehran continue to 'trade' demands for the reopening of the Strait of Hormuz. U.S. President Donald Trump's response to Iran’s demands for a deal on peace was to demand that Iran pay compensation to those killed in wars and attacks, as well as protests. This dimmed the prospects of an imminent agreement to reopen this key waterway. Trump has repeatedly vacillated between threatening escalation or claiming that a deal was near, making investors 'weary'. Stocks fell in Asia as tensions in the Middle East continued and uncertainty about the global inflation outlook weighed on market sentiment. However, Wednesday's U.S. Inflation data will give clues to the Federal Reserve regarding its next rate decision. Beth Hammack, the president of the Cleveland Federal Reserve Bank, said overnight that she believes it is time to start gradually raising interest rates to avoid having to do so more dramatically later.
Data for the next day is not very heavy, so we will focus on the Middle East.
CoreWeave, a company that specializes in AI cloud services, is expected to announce a significant increase in its second-quarter revenue. This comes amid a massive spending spree by tech companies on data centres. Investors are focusing their attention on CoreWeave's outlook and plans for this year. Speaking of AI -?Nvidia announced on 'Monday that it had partnered with six financial institutions to launch compute funding platforms, which aim to raise more than $500 billion in third-party capital?for AI infrastructure. This highlights the size of the investment boom. The yen is back in the spotlight in the foreign exchange market, as it sat on the lower side of 159 cents against the dollar. This means that the Japanese currency has given up some of its gains from the intervention.
Key developments on Tuesday that may influence the markets: - Middle East Developments
Earnings in the U.S. including CoreWeave and Super Micro Computer
Reopening the 5-year German Government Debt Auction
(source: Reuters)