[Update Below] Twelve days ago I set out five vital signs to regularly monitor. Here’s a very quick update:
Southern Hemisphere Crop Production: Drought is casting doubt on Argentina’s corn crop as well as Brazil’s soybeans. Australian wheat is mixed, but record yields in the west seem to be making up for flooded fields in the east. (More) Indonesia’s palm oil inventories continue to be in good shape despite higher demand and continued price advantages compared to sunflower and soy oils.
Global Diesel Demand, Production, and Price: According to the IEA November update:
Diesel prices and cracks (differential to crude oil price) surged to record levels in October, and are now 70% and 425% higher, respectively, than year-ago levels while benchmark Brent prices increased just 11% during the same period. Distillate inventories are at multi-decade lows. French refinery strikes last month and upcoming embargoes propelled diesel prices in Rotterdam, Europe’s main trading hub, to more than $80/bbl above North Sea Dated at one point, before easing somewhat. Diesel premiums in the United States have also soared ahead of the winter heating season in the Northeast.
But January futures contracts for New York Harbor have seen significant price declines since Halloween. More details on US diesel inventories will be released in a few hours. I plan to give these results more attention tomorrow.
Covid Hospitalizations (and Mutations): In much of the world, the number of hospitalized patients with covid is less than half that of this time last year (recent increases notwithstanding). There seems to be a meaningful shift in China’s covid zero policy. If this policy shift persists there are potentially significant implications, both epidemiologically and economically (including for diesel demand).
China’s Export Volume and Value: Reuters reports: “China’s exports and imports likely contracted further in November due to weakening global demand, production disruptions and waning demand at home amid widespread pandemic controls, a Reuters poll showed on Monday. Data for November are expected to show a 3.5% fall in outbound shipments from a year earlier, after October’s figures were down an annual 0.3%, according to the median forecast of 28 economists in the poll. That would mark the worst performance since May 2020.”
North American Electricity Demand and Supply: Late autumn demand has been seasonal and within current generating capacity. The price per kilowatt hour has increased. (More)
While the original conceit for these vital signs relates to human health, the outcomes above seem better suited for a weather analogy. Taken together I perceive seasonal to warmer temperatures with clouds, chance of spotty precipitation, and an uncertain mid-term forecast.
December 9 Update: Bloomberg reporters offer their own perspective on what is ahead as China backs-away from ultra-covid-zero:
The (infection) curves have been consistent all over the world, rising exponentially for about three to four weeks and then falling at a similar rate. The experts I’ve talked to don’t expect anything different in China. It’s pretty clear that a month from now will be near the peak… One data set, from the London-based research firm Airfinity, has a range of 1.3 million to 2.1 million (fatalities). Officials at the Institute for Health Metrics say that’s much too high. They are coming out with new numbers in the next few days. I don’t see a scenario where China avoids the devastation we’ve seen in other places. Given its size, it’s likely to be scary.
CNBC reports, “U.S. manufacturing orders in China are down 40 percent, according to the latest CNBC Supply Chain Heat Map data. As a result of the decrease in orders, Worldwide Logistics tells CNBC it is expecting Chinese factories to shut down two weeks earlier than usual for the Chinese Lunar New Year — Chinese New Year’s Eve falls on Jan. 21 next year. The seven days after the holiday are considered a national holiday.”
S&P Global reports, “Diesel and gasoil stocks in the Northwest European hub of Amsterdam-Rotterdam-Antwerp sat at 1.716 million mt, 24.9% below the five-year average late November and their lowest since 2008 for the time of year, data from Insights Global showed. Inventories elsewhere have faced a similar fate as demand outstrips supply, with diesel stocks across the Atlantic around 37% below the five-year average at the end of November and middle distillate stocks in Singapore around levels last seen in 2004 for this time of year, US Energy Information Administration and Enterprise Singapore data showed… US Gulf Coast exports of ULSD to Europe surged 117% on the month to 484,200 mt in September, before crashing to 284,000 mt in October and rising to about 418,800 mt in November…”
According to the USDA and Bloomberg, “Wheat posted a fifth straight week of losses as prospects brighten for getting global grain shipments out of the war-stressed Black Sea. The US Department of Agriculture raised its outlook for world wheat trade in part on higher exports from Ukraine and Russia, the agency said Friday in its monthly World Agricultural Supply and Demand Estimates.”