The invasion of Ukraine, which commenced on 24th February 2022, has persisted despite attempts by regulatory organizations to deter further escalations. Over a year has passed since its inception, and the conflicts between the two nations continue to disrupt regional and global trade flows, casting a shadow of uncertainty.
Adding to the complexity, recent developments in geopolitics, such as the G7 meeting, clashes in Sudan, and mounting tensions in East Asia, have interwoven to create a tangled web of relations that ripple through product prices.
Considering these unfolding events and their potential impacts on the futures industry, it is imperative to gain a comprehensive understanding of each country's situation. This article aims to provide pertinent information on the evolving dynamics and implications of these ongoing crises.
Global Outlook
The G7, consists of Canada, France, Germany, Italy, Japan, The United Kingdom, the United States, and the European Union. The group met on April 15 and 16 2023 for one of its annual talks titled “G7 Minister Meeting on Climate, Energy and Environment”. The purpose of the meeting was to discuss various recent events and ongoing initiatives such as decarbonisation or the consistent implementation of data collection avenues, boundaries, and scopes.
On the topic of the Russian-Ukraine conflict, G7 maintains a strong stance on deterrence. Based on the meeting report, G7 stated that “we condemn Russia’s illegal, unjustifiable, and unprovoked war of aggression against Ukraine… we condemn Russia’s attempts to use energy and goods as tools of geopolitical coercion.”. The G7 countries have also considered the near-total ban on exports to Russia. In response, Japantimes has reported that “Former Russian President Dmitry Medvedev… would respond by terminating the Black Sea Grain deal that enables vital exports of grain from Ukraine”.
Alternatively, as reported by CNN, the ministers also called on China to “abstain from threats, coercion, intimidation or the use of force”, particularly towards Taiwan and the South China Sea, where the borders drawn are debated upon. In response, Channelnewsasia has reported that “China said on Tuesday (Apr 18) G7 nations in Japan had maliciously slandered and smeared it”. Nonetheless, while some displeasures were held by both parties (G7 and China), “ the situation in the East China Sea and the South China Sea remains stable on the whole”.
Corn
From the March quarterly report by Shanghai Orient Futures (东证期货, 季度报告, 农产品, 上有压力，下有支撑), the import volume of corn above the quote and its progress in auction for China are controlled by polices. It is estimated that China’s total corn imports for the year will be over 20 million tons. Based on the historical export data from the United States, Brazil, and Ukraine to China, and the export forecast from USDA Supply and Demand report for 22/23, the team has predicted an export volume for the year in the following diagram.
Figure 1:Source: Orient Futures Research Report- Soybean Meal.
(东证期货, 季度报告, 农产品, 上有压力，下有支撑)
According to the U.S Corn Export Sales Report, as of March 16th, the United States has cumulatively exported 4.387 million tons of corn to China in the 22/23 marketing year, with an estimated monthly export volume of around 1.2 million tons for the remaining 6 months.
As of February, Brazil has exported 2.219 million tons of corn to China in the 22/23 marketing year, with an estimated monthly export volume of around 1.1 million tons from June to September. Therefore, starting from around August, it is expected that the monthly import volume of corn will double.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG).
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