Climate Change Rocks Agricultural Commodity Market

Agricultural commodities such as coffee, cotton and wheat faced sharp price swings this year as output was hit by extreme weather sparked partly by climate change.

According to analysts, volatile weather conditions and temperatures have adversely impacted crop growth, harvest and supply in key exporters.

“The weather has certainly created tightness in the (agricultural) markets,” Sucden analyst Geordie Wilkes told AFP.

That has stoked prices of soft commodities at a time when global inflation is already soaring due to the post-pandemic demand recovery and supply-chain snarl-ups.

Climate change is under the spotlight as global powers at the two-week COP26 summit in Glasgow attempt to reach agreement to slow the pace of global warming.

Droughts and frost

Brazil, the world’s biggest coffee producer and a major player in corn, was gripped in April by a severe drought, which sent prices briefly spiking on supply woes.

Just three months later in July, the South American giant suffered harsh frosts that pushed coffee prices to multi-year peaks.

Arabica coffee topped $2 a pound — the highest since 2014 — and still remains close to this level.

Elsewhere, southwestern Canada and the northern plains in the United States faced a prolonged springtime drought that damaged wheat production.

Wheat prices were ignited and still remain close to historic highs, with soft wheat trading at $300 per tonne on Euronext.

Greater extremes

Experts forecast the frequency of extreme weather events such as droughts, wildfires, floods and typhoons will simply accelerate.

“The frequency of extreme weather events seen over (recent) years leads us to believe that these events will likely happen more often in the future and therefore agricultural commodity prices will remain elevated,” Rabobank analyst Carlos Mera told AFP.

Wilkes agreed that the outlook was gloomy for soft commodity growers as weather patterns become “more volatile, more extreme.”

Climate change, coupled with Amazon deforestation, was “changing weather patterns and increasing” the frequency of such extreme weather events, he noted.

Volatility can also occur when investors find it difficult to anticipate prevailing weather conditions in key production areas.

Market swings are likewise amplified by the uneven distribution of crops around the world — and the dependency on one country for certain crops, as is the case with arabica coffee in Brazil.

Arabica, for example, is prone to volatility “because this is mainly grown on the highlands, where weather can fluctuate more strongly and crop losses can be more severe,” said Commerzbank analyst Carsten Fritsch.

Brazil is also impacted by the El Nino phenomenon, a warming of surface ocean waters in the eastern Pacific that occurs every two to seven years and causes droughts in some areas and flooding in others.

Domino effect

Added to the picture, some agricultural commodities face a “domino effect” of indirect consequences due to harsh weather conditions elsewhere.

For example, hurricanes in the U.S. Gulf of Mexico caused major damage to oil facilities in the summer, sparking a drop in crude supply and a rebound in oil prices.

That prompted higher sugar prices because the commodity is used in the production of ethanol — a cheaper version of gasoline, or petrol.

The cotton market meanwhile bounced because higher oil prices make it more expensive to produce synthetic fibers.

Cotton prices currently stand at their highest levels for more than a decade.

Source: Voice of America

Inflation Spike May Sway Biden’s Choice for Next Federal Reserve Chair

President Joe Biden and his advisers appear to be nearing a decision on whether to reappoint Federal Reserve Board Chair Jerome Powell when his term ends in February.

But public outcry over persistently high inflation may have changed the terms of the discussion.

Biden is deciding as inflation climbs to levels not seen in three decades, with prices rising for various goods and services as well as necessities such as food and fuel. On Wednesday, the Labor Department reported that inflation in October jumped 6.2% from a year ago, a stunning leap after the Fed had spent nearly a decade unable to push inflation to 2%, its nominal target rate.

Last week, Powell and current Federal Reserve Board Governor Lael Brainard met individually with Biden in the White House, just days after Biden told reporters that he intends to make his plans for the Fed known “fairly quickly.”

With public approval of Biden’s job performance dropping, his party reeling from a gubernatorial election setback in Virginia in early November, and congressional Republicans hammering him for rising prices, Biden’s Fed appointment decision has taken on even greater weight.

Bank regulation on back burner

Since early this year, when speculation began over whether Biden would reappoint Powell, the clear alternative was for him to elevate Brainard to the job. But at the time, the focus of the debate appeared to be on their different approaches to banking regulation.

When people think of the Fed, they think mainly about its role in setting interest rates and controlling the money supply in the United States. However, the Fed also plays a major role in the regulation of some of the largest financial institutions in the country.

Powell, a Republican who was appointed to lead the Fed by former President Donald Trump, has taken what critics on the left view as an overly permissive stance when it comes to the regulation of large financial institutions.

Brainard, the only Democrat on the Fed board, is more aligned with left-leaning members of her party, such as U.S. Senator Elizabeth Warren of Massachusetts, in believing that stricter supervision is necessary to avoid a repeat of the financial crisis that crippled the U.S. economy between late 2007 and mid-2009.

Now, however, with inflation on the rise and the president and his party facing poor public approval ratings, tighter banking regulations may be a second-tier issue for Biden.

“If you want to look at the economy right now and have a ledger of things to worry about, the soundness and safety of the banking system is not at the top of that list,” Mark Hamrick, senior economic analyst for Bankrate.com, told VOA. “Over the long term, it should be toward the top of the list, but for now, banks are performing quite well. We haven’t had a major banking failure for quite some time.”

Inflation the key issue

People who pay attention to the Federal Reserve often categorize members of the board, and of the larger Federal Open Market Committee, which sets interest rates, as being either “hawkish” or “dovish.”

The hawks are policymakers who are sensitive to rising inflation and quick to raise interest rates to prevent inflation from getting out of control, even if it cools the economy to the point where not everyone seeking a job can find one.

Doves, by contrast, prioritize high rates of employment over low inflation, and they will vote to maintain low interest rates until the economy reaches what they consider “full employment.” This is not to say that doves will tolerate any level of inflation, but only that they do not mind if inflation slightly exceeds the Fed’s stated 2% target rate while jobs are still being created.

By any measure, both Powell and Brainard fall into the dovish category. As the U.S. economy has been recovering from the pandemic-induced recession last year, both have supported policies that have kept interest rates at near zero and have pumped huge amounts of money into the system, even as inflation began to rise.

Both have said that they believe the current wave of inflation is a transitory effect of the global economy trying to turn itself back on after the pandemic lockdowns. That stands in sharp contrast to many, such as former Treasury Secretary Lawrence Summers, who have been warning for months that inflation could surge out of control.

Powell, however, is largely seen as less of a dove than Brainard, and with Biden feeling the political pinch, that might tilt the balance in favor of Powell.

Relationship with Congress

Another factor in Powell’s favor is that at a time when the president’s relationship with Republicans in Congress is strained, the current chairman has a rapport with members from both sides of the aisle.

“Within Congress, Powell has built up a great amount of credibility with both sides, both Republicans and Democrats,” said Christopher Russo, a postgraduate research fellow at George Mason University’s Mercatus Center.

“In the pandemic, the Fed adopted a flexible average inflation target, meaning that they are going to run inflation above target after periods where it ran below target, and Powell has done a lot of work to explain the importance of that policy to skeptics in Congress,” Russo told VOA.

He added: “So, when we get to the current point in time, where inflation is running much higher than the inflation target, I think Powell’s credibility here would be an actual asset.”

Powell favored

Most experts have always considered Powell’s reappointment as chairman to be more likely than his replacement, especially as the job of vice chair for banking supervision is opening up, and placing Brainard there might partly placate the Warren wing of the president’s party.

Since the inflation numbers were announced on Wednesday, the odds of a Powell reappointment rose from 71% to 76% as of Friday afternoon on the political betting website PredictIt.

“I think that the politics of this become more complicated by burgeoning and more persistent inflation,” said Hamrick, of Bankrate.com. “And so what might have been seen as more of a competition six to 12 months ago has become less so.”

Source: Voice of America

THE OFFICE OF THE PRESIDENT: Awardees of the 2021 Active Ageing Award announced

On the 12th of November, the awardees of the 2021 Active Ageing Award were officially announced.

The Active Ageing Award is a celebration of a great deal of work, commitment, and dedication in the active ageing sector. This is an annual event dedicated to senior citizens, and five awards were presented this year.

The awardees of each award are:

Active Ageing Award – Mons. Victor Grech

Sports Active Ageing Award – Mr Mario Meli

Intergenerational Solidarity Award – Mr Anthony Darmanin

Senior Academic Award – Mr Publio Agius

Senior Cultural Award – Mr Albert Marshall

In a speech for the occasion, Minister for Senior Citizens and Active Ageing Michael Farrugia praised the dedication of people and individuals who, thanks to their commitment, make a difference in the lives not only of other senior citizens, but also in the community and in the lives of other people of all ages. He said that every person deserves to be rewarded for the good things they do, whilst urging more senior citizens, especially women, to participate in activities and initiatives that help them stay active in society and to continue to help those around them.

During this ceremony, President of Malta George Vella said that, “Respect, inclusion, and equal opportunities are the key ingredients that over time have further strengthened the importance of active ageing and the need as a country not to lose the wealth of talent and knowledge that these people can and want to pass on to society.”

The President added that senior citizens should have their voices heard on those aspects of life and the conditions that they feel are harming them or future generations. While congratulating all the awardees, the President stated that senior citizens can be the catalyst for a more compassionate, inclusive and, above all, sustainable society.

Source: Office of the Prime Minister

THE MINISTRY FOR THE ECONOMY AND INDUSTRY Malta continues to support EU leadership in international trade

Minister Silvio Schembri reiterates the country’s support towards stronger trade relations amongst WTO members and improved commercial ties between EU and US

During the EU Foreign Affairs Council on Trade in Brussels, Minister for the Economy and Industry Silvio Schembri called for the EU to safeguard its credibility as a reputable international trade partner. He said that Malta supports the strengthening of trade relations amongst the 164 World Trade Organisation country members and improved commercial ties between the EU and the US.

During a discussion on trade agreements, Malta was among the countries which called for progress to finalise ongoing advanced Free Trade Agreement negotiations with countries such as New Zealand and Chile. “Our economies are dependent on international markets for goods and services, and investment is very important for growth and jobs,” said Minister Schembri. He welcomed the recent improvements in the trade relations with the US.

The EU Ministers also tackled the issue of e-commerce. During his intervention, Minister Silvio Schembri expressed Malta’s backing for joint statements initiatives made by several members of the WTO and related proposals which call for the facilitation of systems revolving around investments in e-payments, e-contracts, e-signatures, e-authentication, data flow, intellectual property and business trust.

The topic of fisheries subsidies was also debated. Minister Schembri appealed for the progress on agreements aimed at finding a sustainable balance between supporting fisheries production and fish stock conservation, while respecting the EU’s sensitivities.

The discussion also addressed common interests in view of the upcoming 12th World Trade Organisation Ministerial Conference, which will be held at the end of November in Geneva. A work-programme that covers the reform of the organisation’s holistic operations is being proposed.

The function of the WTO is to regulate and facilitate international trade between nations. Governments use the organisation to establish, revise, and enforce the rules that govern international trade.

Minister Schembri noted that Malta continues to view the WTO’s rule-based multilateral trading system as essential towards safeguarding against protectionist tendencies, as protectionist policies place specific restrictions on international trade for the benefit of a singular domestic economy. He concluded by saying that Malta, as a small and open economy, wants to ensure the promotion of multilateral trade rules. Thus, it will keep on striving to set a level playing-field between all WTO international members.

During the discussion in the Council, EU Trade Commissioner Valdis Dombrovskis welcomed Malta’s efforts in promoting the EU’s role in plurilateral trade relations.

Source: Office of the Prime Minister

THE MINISTRY FOR ENERGY, ENTERPRISE AND SUSTAINABLE DEVELOPMENT AND THE PARLIAMENTARY SECRETARIAT FOR CITIZENSHIP AND COMMUNITIES: Malta’s first sustainable baby boxes to start being distributed on Monday

As of Monday, 15th November, all new-born children in Malta and Gozo will start receiving a sustainable baby box upon registration of the child.

The baby box includes 10 sustainable products, such as a baby blanket made of bamboo, a reusable nappy and a tote bag made from recycled plastic bottles, a feeding bib, teether, socks and mittens.

The box, with the theme of ‘You Hold Their Future’, is aimed at introducing sustainable living in our lives at every stage, including at the start of our lives. Through the Directorate of Sustainable Development, the distribution will kick off as a three month pilot project, to be extended as announced in the Budget 2022.

This project was announced by Minister for Energy, Enterprise and Sustainable Development Miriam Dalli together with Parliamentary Secretary for Citizenship and Communities Alex Muscat, during the launch of the Baby Box at the Lil’Ville Childcare Centre.

“Through the Sustainable Baby Box initiative, we want to help nurture a sustainable culture within our households. We also know that sustainable living may not be easily accessible for everyone, for various reasons. We decided to take the first step and reach out to help further the knowledge on how it is possible to lead a sustainable life at every stage of our lives. We are doing this through other supporting measures targeting not only families, but also students, youths and enterprises,” said Minister Miriam Dalli.

“In order to reach sustainability in economic, environment and social terms, we all need to work together,” Minister Dalli concluded.

Parliamentary Secretary for Citizenship and Communities Alex Muscat said that Identity Malta’s role in distributing these boxes is yet another example of the agency’s commitment towards facilitating its services.

Parliamentary Secretary Alex Muscat explained that Identity Malta’s office in Mater Dei was set up in order to make matters easier for families, who can now register their new-borns in hospital, without having to go anywhere else. “Distributing these baby boxes from Identity Malta’s office will enhance the services we offer, as well as introducing new families to a sustainable lifestyle and instilling values that will hopefully last a lifetime,” the Parliamentary Secretary added.

He said that the agency practices what it preaches by adopting a sustainable work ethic, offering many of its services online, therefore eliminating the use of paper.

This initiative aims to address two Sustainable Development Goals by the United Nations; sustainable economy, and responsible consumption and production.

This Baby Box can be collected from the offices at Identity Malta from Mater Dei Hospital or in Marsa and the Gozo Registry Office, when registering a new-born.

Source: Office of the Prime Minister

THE MALTA COMMUNITY CHEST FUND FOUNDATION Online arts auction in aid of the Malta Community Chest Fund Foundation

As part of an efforts to make up for the funding shortfall experienced by the Malta Community Chest Fund Foundation (MCCFF) during the past year and a half due to the COVID-19 pandemic, an online arts auction will be held from Monday 15th November until Sunday 28th November 2021.

The public will have the opportunity to place a bid, via artsauction.mt, on around 70 works spanning a variety of genres and themes that include paintings, sculptures, prints, and photography. These works have been submitted by over 50 artists who are either Maltese or have a connection to Malta.

The mission of the MCCFF is to provide financial, material, and professional support to vulnerable members of our society to improve their quality of life. The services that the Foundation offers include paying for cancer treatment as well as specific cancer medicine, financing parental stays of children receiving treatment abroad, providing food vouchers, and other services vital to dignified living, and to alleviate material and psychological suffering. Its bill for the financial assistance it extends amounts to around €1.4m per month.

The online art auction is being planned by an organising committee and is being curated by Melanie Erixon.

Source: Office of the Prime Minister