Whilst the European economy appears to be successfully resisting any and all efforts at recovery, the US has had more promising signs with a continuing rise in consumer confidence and an improvement in the US labor market. China has continued to power global growth, and has for the most part completed its once-every-10-years handover of power to the next generation of political leaders. Below we summarize how 2012 shaped up for several different areas, world-wide.
Global maize and wheat prices are up significantly over the past 12 months as crops have been damaged this year by drought in both the US and Russia. World production has dropped by more than 5% from last season for both crops, and this drop will reduce the level of stocks available, as consumption has remained strong. But despite the drop in production, 2012/13 is still expected to have been the second largest maize harvest on record.
Vegetable oils have been mixed over the year. Palm oil fell in price as world production reached yet another record level thanks to continued increases in mature palm oil area in Indonesia. Olive oil prices rose sharply, especially in Spain, the world's largest producer, as drought over the summer reduced production there by as much as 45% from last season's record high output.
Sugar and coffee prices are both down, whilst tea prices rose sharply and the cocoa market has become more normal, with butter now trading at a premium over powder. The sugar market has seen two consecutive seasons of record global production and coffee production this season has been very good for an 'off' year in its biennial cycle. However, world black tea production for the first three quarters of 2012 was down year-on-year, as Kenyan production fell due to dry weather conditions.
Dairy prices have rebounded over the last quarter and have made up a lot of the price lost over the early part of the year, especially within the diary powder market with SMP now up on the year. Milk supply in the northern hemisphere has now reached its seasonal minimum, and dairy product availability has tightened as a result.
Global plastic prices have increased significantly over the last quarter, and are now up year-on-year. In Europe, the cost of plastic feedstocks such as ethylene (derived from crude oil) increased as a number of unplanned maintenance shutdowns reduced EU production. However, underlying demand for plastics remains weak due to the generally weak state of the world economy.
Coal prices are down substantially over the year, despite a recovery in import demand from China, as global availability remains good. This, coupled with limited demand from the construction industry, has led to a drop in the cost of steel. A range of key shipping indices are down year-on-year as significant overcapacity remains in the global market. Crude oil prices are very similar to those seen at this time last year as recent supply disruptions due to instability in the Middle East have been balanced by concerns that the poor global economic prospects will limited any growth in demand.