Coal: What prospects for the most hated commodity?

In his book Hot Commodities Jim Rogers highlights the example of lead which despite being the most hated commodity (given long known about adverse health impacts) underwent a bull market in the early 2000’s as output problems at existing mines and a lack of investment in new mines resulted in supply falling faster than demand.

Thinking about the example of lead, the most hated commodity now has got to be coal (from a climate change perspective). Other nominations for the award go to sugar (from a health point of view) and uranium (because of a safety risks following Fukushima).

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Are bitter times ahead for sugar producers as Cuba returns?

A once mighty commodity producer, long vilified by the West strikes fear into other producers as its relationship with the US start to thaw. No, this isn’t Iran and the oil market, but Cuba and the sugar market.

lezumbalaberenjena / Foter / CC BY-NC-ND

Cuba was once the world’s biggest sugar exporter with raw output reaching 8.1 million tonnes in 1989. Then its industry went into decline after Cuba’s main ally for 30 years, the former Soviet Union, collapsed in 1991.¬†Cuba shut down and dismantled 71 of 156 mills in 2003 and converted 60 percent of sugar plantation land to other uses. Since then more mills have closed.

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The changing of the seasons

Although they should never be relied upon completely to determine where commodity prices will go next, seasonal price charts can give some insight into the drivers of commodity prices as the seasons change.

The oil market is a case in point where WTI crude prices used to hit a low in the first quarter and then peak around the third quarter as demand reached a peak during the summer (the so called ‘driving season’ in the US and hot weather in the Middle East requiring air conditioning increasing demand for oil) while supply problems (such as the hurricane season in the US Gulf) came to a head.

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