Alcoa Corp. is slated to kick off the commodity world’s earnings season on Wednesday, while climate observers will be keenly watching for any developments as the US’s John Kerry makes a highly-anticipated visit to Beijing to meet with his Chinese counterpart. The two superpowers have a poor track record on emissions. Here are five key charts to consider as the week gets underway.
(Bloomberg) — Alcoa Corp. is slated to kick off the commodity world’s earnings season on Wednesday, while climate observers will be keenly watching for any developments as the US’s John Kerry makes a highly-anticipated visit to Beijing to meet with his Chinese counterpart. The two superpowers have a poor track record on emissions. Here are five key charts to consider as the week gets underway.
Climate
The world’s two biggest polluters are meeting for talks on global warming amid ongoing tensions between the US and China. The Asian nation accounted for the largest share of global carbon dioxide emissions in 2021, according to European Commission data, while the US was a distant second at almost 13%. Even so, the US has by far the biggest share of historical, cumulative emissions, having relied on the unfettered burning of coal, oil and gas to fuel its economic growth for decades. Any meaningful progress on tackling harmful greenhouse gases will require the cooperation of both countries, especially ahead of a UN climate conference in the United Arab Emirates starting in November that is already being dogged by a host of concerns.
Metals
Alcoa is set to release its second-quarter earnings as global aluminum prices continue a pullback. The largest US producer has seen shares drop 24% this year amid weak fundamentals and as uncertainty in US economic growth squelched robust demand for the metal used in everything from automobiles to skyscrapers to consumer appliances. Aluminum consumption has also lagged due to a sluggish recovery from pandemic-related restrictions in China, the world’s biggest metals user. Investors will be focused on Alcoa’s latest forecast on aluminum shipments, as well as any commentary Chief Executive Officer Roy Harvey may have regarding a buildup of worldwide metal stockpiles coming from Russia. Harvey in April warned that Russian-origin metal threatened to distort the global benchmark price as more customers refuse to take delivery of it in the wake of the nation’s ongoing conflict with Ukraine.
Grains
Wheat and corn futures edged higher Monday after Russia ended the international deal that allows the safe export of Ukraine grains through the Black Sea. Moscow had repeatedly threatened to leave the pact, which had been extended three times. The deal has been limping along due to red tape and slow vessel inspections, causing total exports to drop considerably in recent months, according to United Nations data. In total, nearly 33 million tons of crops were exported since the agreement was signed last July. Russia’s move jeopardizes a key trade route from Ukraine, one of the world’s top grain and vegetable oil shippers just as its next harvest begins.
Oil
Crude oil futures have been in the doldrums for most of this year, but are staging a recovery in July. Through Friday’s settlement, West Texas Intermediate is up almost 7% this month and flirting with a breach of its closely watched 200-day moving average, a feat that hasn’t been done in almost 11 months. Meanwhile, Brent futures climbed above $80 a barrel last week for the first time since April. The rally in both contracts comes amid a rebound in demand in China and elsewhere, as well as production cutbacks by Saudi Arabia and its OPEC+ allies that are set to drain stockpiles around the world. Even so, both WTI and Brent are lower on the year.
Agriculture
Corn prices in the US have been falling in recent weeks thanks to heavy rains across the Plains and Midwest that have boosted prospects for the crop. Ranchers have been waiting months — if not years — for drought to loosen its grip and bring down costs of the grain. That’s now pushing up prices for feeder cattle as demand for the lighter-weight livestock climbs in a race to bulk them up before slaughter. The US Department of Agriculture is set to release its biannual cattle inventory and monthly feed report on Friday — both key readings to determine future beef supplies.
–With assistance from Jennifer A. Dlouhy, Megan Durisin, Joe Deaux and Michael Hirtzer.
(Updates fourth paragraph with collapse of Ukraine grain-export deal.)
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