The Kiwi Kommodity Klub - Sperg about commodity markets here

[RussianParasite]

Hello my fellow Bidness-minded Kiwis.

I have noticed that there are threads on stocks, crypto, and precious metals (among others) but that we do not have a central thread in which to discuss commodities/ commodity markets. As such, I have decided to start the KKK.

This seems like a good time to make such a thread as there has been much discussion around inflation (which is both partially affecting and being driven by high commodity prices/shortages). Anything that interests you about commodities or their markets can be posted here. As a general rule, let’s define what commodities actually are and limit discussion to those topics:

1. Agricultural products (feed/animals/crops/fertilizers/coffee/corn/cotton etc.)

2. Industrial Metals (Copper, lead, zinc, tin, steel, aluminum, etc. Preferably not gold/silver or other precious metals as they have limited industrial use generally speaking)

3. Lumber and related products (paper)

4. Crude oil and derivatives (why my gas prices so high?)

5. Power prices (related to number four usually but have interesting market dynamics of their own)

We can of course add others as I am probably missing a few. Overall, though, I think it could be a fun/informative discussion. I aim to run a poll once every quarter or two as it could be fun to see where everyone thinks prices are going/ what is happening in the markets.

 

[2 Guys 1 Amhole]

Chicken prices have blown up this year.
It’s a staple in most of my meals, so I noticed immediately when that started to happen.

A year and a half ago I could get it for about 1.13 per lb, and now it is hovering around 1.93 per lb. It is also being sold out and is missing from the shelf most of the week. You have to go to the market at the right time or you’re out of luck.

 

[RussianParasite]

Chicken prices have blown up this year.
It’s a staple in most of my meals, so I noticed immediately when that started to happen.

A year and a half ago I could get it for about 1.13 per lb, and now it is hovering around 1.93 per lb. It is also being sold out and is missing from the shelf most of the week. You have to go to the market at the right time or you’re out of luck.

I noticed this with chicken wing prices at some of my local restaurants. Absolutely crazy expensive now.

Just from some preliminary reading (I don’t know much about the market for chicken) it appears that a combination of the “chicken sandwich wars” between fast food restaurants has driven up demand like crazy. Meanwhile, there is a shortage of workers in the poultry industry. The two have worked to cause something like a 60% increase year-on-year price spike and now they have broken their prior all-time-high.

 

[2 Guys 1 Amhole]

Now that I think about it, it’s the same with Bacon. I don’t get it often because it’s so fattening, but recently any time I’ve thought to treat myself and buy a package of it, the shelves are totally empty. It’s been this way for weeks now.
And it’s not just meat and produce, I’ve noticed odds and ends being completely sold out. Furniture polish, for example. I have no idea if that’s just a coincidence or not. I haven’t looked into it. I don’t think it is, though, because I’ve never in my life had trouble finding it in stock before.

 

[OfficerBagget]

Bacon, Chicken and Canned goods are in very high demand. Cleaning Supplies too.

Only had issue with Bacon tho. I've found all other cuts of Pork are still well stocked.

Alot of people have been staying home for 2 years now and Home cooking is a growing trend. I don't know if the shortages is partially to do with that.

But you mentioning Furniture Polish, for 2 weeks now I've not found Furniture polish stocked. And most Industrial Metals are in high stock, But Lumber prices are growing like crazy, getting wood at most hardware stores is getting very pricey

 

[RussianParasite]

But Lumber prices are growing like crazy, getting wood at most hardware stores is getting very pricey

That’s weird because bulk lumber prices crashed back in June and are still trading at or below pre-pandemic levels. Metals in general are way, way higher in price than they used to be.

 

[OfficerBagget]

That’s weird because bulk lumber prices crashed back in June and are still trading at or below pre-pandemic levels. Metals in general are way, way higher in price than they used to be.

View attachment 2643271

Yea I looked into it. Lumber prices are so high in my area because of growing construction. Property prices are getting ridiculous where I'm at.


Which you should put Real Estate on your list too lol

 

[Uncle Sid]

I used to collect pure Canadian nickels when the spot price was 4x face value but the nickel market crashed so I dumped them all into a CoinStar machine.

 

[mindlessobserver]

Beef and Chicken has gotten pretty retarded lately. Pork seems to be trading at about the same though. Curious if there is a structural reason for that or if pork just has a supply glut and it's going to follow along.

 

[Audit]

China has been looking to import a lot of beef lately, per Reuters, so beef costs should rise due to foreign competition for US product. Pork and chicken seem to be more of a local product. I've been getting pork for <$1.00 for large volume cuts locally. Chicken is roughly the same for a whole bird unless you want it butchered. Breasts and wings are silly expensive >$2.00 by comparison. Not sure if this is at all labor associated. There have been many reports of meat processing labor shortages during the pandemic. Meat packing jobs have historically paid more than minimum wage (~$18/hr afaik), so maybe they're finding less stressful jobs in the current labor market?

 

[tehpope]

I think Crude will get to $100 a barrel by the end of the year. I think a few major banks have called that too earlier in the year.

 

[mindlessobserver]

I think Crude will get to $100 a barrel by the end of the year. I think a few major banks have called that too earlier in the year.

Which absolutely astounding news for Russia. Ironic considering all the shrieks about Trump being a Russian plant. Biden has done more for Putin in 1 year then Trump did in 4.

 

[Simple Moving Average]

I think Crude will get to $100 a barrel by the end of the year. I think a few major banks have called that too earlier in the year.

Scale out target is $120 here.

 

[69ing Ur Mom]

Coal prices ass blasting China's ability to keep the power on needs to be mentioned.

Power generation contracts were set when coal prices were lower. Now power companies are operating at a loss, so they cut output to reduce that loss.

I'm hopeful prices stay high all winter.

Coal PRICE Today | Coal Spot Price Chart | Live Price of Coal per Ounce | Markets Insider

Coal Price: Get all information on the Price of Coal including News, Charts and Realtime Quotes.

markets.businessinsider.com

More Power Outages as Communist China Suffers From Coal Shortage - Vision Times

On Oct. 11, Liaoning province in China issued a level two alert for power shortage. Liaoning is part of China's rust-belt industrial region. It is the largest

www.visiontimes.com

Explainer: Why Is There A Power Crisis In China?

A post-pandemic export boom, coal supply shortages, government emissions targets and inefficient renewables sources have all been blamed for outages that have seen the lights turned out in parts of the world’s second biggest economy

www.asiafinancial.com

 

[mindlessobserver]

Coal prices ass blasting China's ability to keep the power on needs to be mentioned.

Power generation contracts were set when coal prices were lower. Now power companies are operating at a loss, so they cut output to reduce that loss.

I'm hopeful prices stay high all winter.

View attachment 2646851

Coal PRICE Today | Coal Spot Price Chart | Live Price of Coal per Ounce | Markets Insider

Coal Price: Get all information on the Price of Coal including News, Charts and Realtime Quotes.

markets.businessinsider.com

More Power Outages as Communist China Suffers From Coal Shortage - Vision Times

On Oct. 11, Liaoning province in China issued a level two alert for power shortage. Liaoning is part of China's rust-belt industrial region. It is the largest

www.visiontimes.com

Explainer: Why Is There A Power Crisis In China?

A post-pandemic export boom, coal supply shortages, government emissions targets and inefficient renewables sources have all been blamed for outages that have seen the lights turned out in parts of the world’s second biggest economy

www.asiafinancial.com

It's almost like all critical commodities denominated in dollar's are....inflating....

 

[69ing Ur Mom]

It's almost like all critical commodities denominated in dollar's are....inflating....

I think the main driver of price is supply and demand combined with supply chain issues.

China has reduced coal as a percentage of power generation. However, total usage of coal has increased. This while global production has been flat since 2011.

Coal and lignite Production Data | World Coal Production | Enerdata

Coal production in the world. Coal Lignite statistics: percentage best producers, analysis on world production and graphs provided by Enerdata.

yearbook.enerdata.net

 

[RussianParasite]

I think the main driver of price is supply and demand combined with supply chain issues.

China has reduced coal as a percentage of power generation. However, total usage of coal has increased. This while global production has been flat since 2011.

View attachment 2646901

Coal and lignite Production Data | World Coal Production | Enerdata

Coal production in the world. Coal Lignite statistics: percentage best producers, analysis on world production and graphs provided by Enerdata.

yearbook.enerdata.net

Totally. There is also the fact that not long ago they completely soured relations with Australia, which was a huge coal provider. Now they are playing buddy buddy with them again in an attempt to make things a little better.

The power shortages in China are a massive supply risk to manufactured goods all over. Shit is going down over there and it honestly makes me kind of nervous.

 

[69ing Ur Mom]

Totally. There is also the fact that not long ago they completely soured relations with Australia, which was a huge coal provider. Now they are playing buddy buddy with them again in an attempt to make things a little better.

I didn't include that because I'm not sure how much that has an impact on the price of coal.

China banned Australian coal because the Aussies were asking questions about Covid's origin. The problem with that is the power plants on the east coast of China are setup to use Australian coal, which burns hotter than domestically produced Chinese coal.

The power plants need to be retrofitted in order to use domestic coal. That's not going to happen when producing electricity will cause losses.

Australian coal is also cheaper to transport to the east coast of China than the coal from the western part of the country. No one wants to send an empty container ship back to China.

It doesn't matter if China wants to play nice as Australia has already found other market for their coal. The CCP widely overestimated their power in this conflict.

How One Australian Coal Giant Turned China’s Ban Into a Win

China’s ban on Australian coal imports has proved a boon for Sydney-listed Coronado Global Resources Inc., one of the world’s top producers of the metallurgical variety that’s key to steelmaking.

www.bloomberg.com

The power shortage in China are a massive supply risk to manufactured goods all over. Shit is going down over there and it honestly makes me kind of nervous.

China is less of a supply risk every day. Trump was actively trying to get companies to get their production out of China. Japan had (has?) a program where they would pay half the cost of companies bringing production back home.

Even without a governmental push, everyone has finally realized they're never going to have access to the Chinese market. Hollywood is a well known example. For manufacturers of goods, counterfeits and copies are going straight out the back of factories.

You'll see more goods coming from Vietnam, Thailand, Laos, Cambodia, and India in the future.

I would be more concerned about the price of iron ore collapsing should there be any slowdown in property development in China. That appears to be happening as Evergrande and other Chinese developers look like they are going to be bankrupt soon.

Why China’s property market can expect a further slowdown

Even before Evergrande’s troubles, developers were taking steps to reduce leverage to meet new rules, a tightening of mortgage approvals had dampened housing demand and market concerns over default risks had led to higher financing costs.

www.scmp.com

 

[RussianParasite]

I would be more concerned about the price of iron ore collapsing

Interesting stuff all around, thanks for the information especially around coal. Iron ore is something I know a fair deal about though, and the price collapse is directly linked to the aforementioned power shortages in China.

Essentially, the CCP is telling manufactures, including steel manufactures, to stop operating at full capacity so that power can stay online for residential use. As the bulk of their steel making capacity is done at Blast Furnace/ Basic Oxygen Furnace operations, this puts a huge dent in iron ore demand because this process relies heavily on iron ore as an input as opposed to, say, steel scrap metal. Yeah, iron ore collapsed from like $200/t to around $100/t (more as of today) , but just a couple of years ago a $90/t price for iron ore was considered very high even after the collapse of Vale’s huge tailings dam in Brazil.

It’s a “price collapse” in the sense that prices fell quickly, but they still remain at historically elevated levels. I’m sure freight costs play a role here, but it still illustrates that iron ore demand and supply— due to a variety of factors— will not reach a balance in the next few months.

 

[Secret Messages]

what's up with oats