Coffee prices scored new lows this week as Brazil was snared by emerging markets turmoil, while crude oil sank on stubborn fears over Chinese demand and global oversupply.
Top coffee producer Brazil hit the headlines after Standard & Poor’s ratings agency on Wednesday slashed the nation’s credit assessment to junk. The bombshell sent Brazil’s currency, the real, collapsing to a new 13-year low point against the US dollar.
In turn, Robusta coffee hit a two-year nadir at US$1,544 per tonne in Friday trade in London, while Arabica touched US$1.16 per pound (0.45kg) — last seen one and a half years ago — in New York.
Photo: Bloomberg
“The further depreciation of the Brazilian real was to blame for the falling coffee price,” Commerzbank analyst Carsten Fritsch said.
“After S&P downgraded Brazil’s credit rating to junk level on Wednesday, the Brazilian currency plunged to its lowest level since October 2002,” he said.
The Latin American powerhouse saw economic growth peak at 7.5 percent in 2010 during a global commodities boom.
However, much like Russia, Brazil has been hit hard by the plummeting value of oil and other raw materials, as well as declining demand from China. Brazil, the world’s leading producer of coffee and sugar, is also a major exporter of oil, iron ore and soybeans.
Meanwhile, the oil market see-sawed this week as traders reacted to mixed signals over demand and supply, but finished sharply lower.
“This week in oil was rather a zigzag,” Fritsch said.
“Fundamentals [of supply and demand] were also mixed this week, with lower Chinese oil imports and rising US inventories being offset by falling US oil production and a bullish IEA report,” he said.
The price of crude has fluctuated wildly in recent weeks on worries over top energy consumer China and the US interest rate outlook.
Financial markets have been rocked by concern that China’s economic slowdown could herald a global recession.
“The world appears to be at a material and rising risk of entering a recession, led by emerging markets and in particular by China,” Citi analyst Bruce Rolph said in a note to clients.
“Should China enter a recession — and with Russia and Brazil already in recession — many other emerging markets, already weakened, will follow,” he said.
“This could be driven in part by the effects of China’s downturn on the demand for their exports and, for the commodity exporters, on commodity prices,” he said.
Rabobank analyst Jane Foley agreed that China’s slowdown was still looming large, while other emerging markets faced “extensive” problems arising from recent falls in commodity prices.
“In recent months it has become increasingly clear that the world economy has lost an engine of world growth,” Foley said.
“The economic expansion in China is slowing, but the problems facing emerging markets are far more extensive,” she said.
“Brazil and Russia are both in recession and the economies of many other commodity producing countries have been hit hard by supply gluts in outputs such as oil, copper and iron ore,” she added.
Oil has roughly halved in value since last year, plagued also by a worldwide supply glut and booming US shale output.
By the end of the week, oil prices were trading significantly lower in London.
Brent North Sea crude changed hands at US$47.31 a barrel — down from US$49.95 a week earlier. WTI traded at US$44.23, up from US$46.22.
Both London and New York coffee prices ended the week in the red, but sugar finished on a mixed note as rainy weather boosted hopes of a bumper crop.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last