After the hottest June in recent history globally, the summer has brought its almost customary array of heatwaves, droughts, wildfires, and heat domes. Only the most stubborn of climate skeptics can still deny the magnitude of the ongoing climate change, whether it be 'natural' or sizely accelerated by human activities.

The consequences are significant for all natural resources, both in terms of production, demand, and, of course, their markets. In the field of energy, in the northern hemisphere – the wealthiest – we must adapt to peak demand during the summer (the ‘cooling season’) and therefore a reduced seasonality in a market like natural gas. Moreover, all the efforts towards energy transition have opened the door to new dependencies, particularly for critical metals (mostly electrical) and China, by implementing quotas for gallium and germanium, has just reaffirmed its decisive role in the mining and metallurgy of almost all of these substances. Tomorrow, the same could be true for copper, which promises to be the most crucial metal in the years to come. Agriculture, on the other hand, remains dependent on increasingly capricious climate swings: despite excellent harvests in 2023, the prospect of El Niño is a cause for concern for the upcoming seasons.

Of the four horsemen of the CyclOpe 2023 Apocalypse, the one bearing ‘wild beasts,’ i.e., nature and climate, is perhaps the least furious but certainly the most insidious.

The first horseman, war, continues to devastate the plains between the Danube and the Dnieper, bringing with it a cloak of misery and destruction. Vladimir Putin has – quite logically from his perspective – decided to close the cereal corridor that had allowed Ukraine to export around thirty million tons of cereals (mostly maize) since last August. Russian artillery and drones have also targeted Ukrainian ports on the Danube, potentially limiting Ukraine to exit routes through the European Union, which are longer, more expensive, and politically more challenging to manage. Global markets should not suffer too much, as the harvests are expected to be abundant, but more than ever, Putin is using the ‘wheat weapon’ as a tool of propaganda, especially towards Africa (where questions also arise about the future of Wagner). Furthermore, during the war, Russian oil and even gas continue to flow, delighting traders in Dubai… But the war horseman is also very active in Africa (with a new coup in Niger at the heart of a turbulent Sahelian band), the Middle East, and Central Asia, not to mention the tensions around Taiwan, which have been somewhat muted lately (but what to make of the ‘disappearance’ of the Chinese Foreign Minister!). The war horseman is at work, and it is he who carries and drives the one of hunger and food poverty that still torments nearly a billion human beings.

The only horseman to have paused in his race is the one of pestilence. The world seems to have moved on from Covid. However, there are still some doubts about its toll. The publication – quickly withdrawn – of cremation figures from a Chinese province suggests that China’s toll in the early months of 2023 exceeded one million deaths. Covid has likely cost about thirty million lives worldwide, less than the Spanish flu a century earlier but with a completely different economic and social impact. And the field of pandemics – this time, animal-related – remains wide open…

With their disorderly charge, our four horsemen are responsible for a major disruption of the economic and political model that dominated the ‘Golden Thirty’ years of a certain ‘happy globalization.’ The ‘end of history’ we had dreamed of has receded further. Climate, geopolitical, health, and food challenges will be at the heart of the coming years. But in the book of Revelation (Apocalypse), it is firmly stated that the righteous must prepare to face the challenges of the horsemen to prepare ‘a new heaven and a new earth’ (Revelation 21:1).

 

  This is an excerpt from the monthly summary published by the CyclOpe Circle.The full version, spanning 150 pages, is available by subscription. For more information, please contact us at cyclope@ampersandworld.ch.

Le Cercle CyclOpe
Its purpose is to regularly bring together market participants in international markets: bankers, insurers, brokers, managers, traders, producers, and consumers gather to exchange informally over lunch.

A complete membership in the CyclOpe Circle includes:
• Les réunions du Cercle:
• Attendance at CyclOpe Circle Meetings:
– Six lunchs taking place in Paris at the Automobile Club de France.
– Six lunchs taking place in Geneva at the Cercle de La Terrasse.
• Annual CyclOpe Report (Available in both print and digital versions, in English and French).
• Access to the CyclOpe Circle of Experts and the international CyclOpe network.
• Subscription to the monthly summary (Every month, it’s a comprehensive document of over 150 pages).

To subscribe to CyclOpe reports or events, you can contact us at cyclope@ampersandworld.ch.