Summary

Kathleen discussed the cyclical nature of commodities, emphasising that current trends suggest a short-term rise in energy prices, while metals and agriculture may experience declines. She expressed skepticism about the anticipated high demand for metals, particularly copper, due to the energy transition, arguing that technological advancements and recycling will offset supply concerns. Kathleen also highlighted OPEC's disciplined control over oil supply, predicting higher oil prices due to reduced inventories and increased demand driven by extreme weather. Additionally, she noted that natural gas prices are likely to remain volatile due to fluctuating supply and demand dynamics. Judy's presentation focused on the dramatic rise in cocoa prices, which have surged to over $12,000 per ton, more than doubling the previous all-time high. She attributed this spike to severe production shortfalls in key cocoa-producing countries like the Ivory Coast and Ghana, caused by heavy rains, disease, and other issues. This has led to extreme market volatility and significant challenges for manufacturers, particularly those unable to manage such high costs. Judy explained that the cocoa market's strong backwardation and high butter prices have strained margins, forcing manufacturers to seek alternatives or reduce cocoa usage. She also noted that despite some potential recovery in production, the ongoing supply issues and pre-existing commitments will likely keep cocoa prices elevated, with a persistent supply deficit expected into the next year. Paul focused on the significant shifts in the oil industry, including the dramatic rise in U.S. oil and gas production, making the U.S. the world's largest oil and LNG exporter. He noted the changing correlation between oil prices and the dollar since the Ukraine invasion and discussed the strong performance of oil equities despite market volatility. Paul emphasised the impact of AI on global power demand and the importance of U.S. unconventional production in balancing the global oil market. He also highlighted the current high oil demand, which, despite oversupply concerns, presents a bullish outlook for oil stocks in the near term.

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