Written Commentary
The Ghost in the Machine Q4 2024
November 15, 2024
Welcome to the Q4 2024 edition of the Ghost In The Machine
Welcome to the Q4 edition of The Ghost In The Machine, as the dust settles on the US elections, UK budget and markets row back on US and UK rate expectations. Agricultural commodities are a key theme ahead of the European Commodities Exchange (ECE) conference in early December.
In this Q4 edition, there is a particular focus on Grains, Sugar, Oil, Volatility, Futures, Options, EUDR, Regulation, Russia, BRICS, Food Security, Elections, Interest Rates, Inflation and Global Debt.
- On the regulatory side, the EU has been forced into delaying implementation of its EUDR (EU Deforestation Regulation), following strongly worded objections from many major countries, we take a look at some of the objections, and the updated EU guidance on implementation.
- Russia’s interference in, and manipulation of global grain markets has not only increased price volatility, but also has profound implications for global flood security, above all for importing countries, though it is debatable whether the proposed BRICS grains exchange will work in practice.
- With the run of elections behind us, there is a look at the outlook for commodities in 2025, with a more detailed view on prospects for Sugar. The CME’s CVOL potentially offers a more holistic view of implied volatility, and also facilitates comparison of curve structures with other markets.
- There is also an in depth look at the dynamics of ‘in the money’ options in the oil market. Inflation may have fallen back substantially in most of the world, but in the US it is important to distinguish the implications and importance for the Fed rate outlook of CPI as against the targeted PCE deflator measures.
- There are increasing concerns about global debt levels, which as we have moved through the various elections have resulted in an increase in government bond risk premia in major economies, and while many may suggest that this is ‘crying wolf’, there are aspects that imply this time may be different.
Marc Ostwald
Chief Economist & Global Strategist
ADM Investor Services International Limited
Chief Economist & Global Strategist
ADM Investor Services International Limited
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