April 2020


        The coronavirus is upon us and the world has entered its worst economic crisis since WWII. For the moment, the pandemic (measured in number of deaths) remains weak when compared to the great historical precedents of the Spanish (1918-1919) or Asian (1956-1957) flus. But in the age of globalisation, it has affected the entire planet and provoked reactions without equivalence in history: more than half of the population of the planet is confined, planes and cars are stopped, the activity on the planet is likely to plunge by 10% in the second quarter of 2020.


        In this context, the oil counter-shock launched in early March by Saudi Arabia is almost secondary and was swept away by the dramatic drop in world oil consumption.


        Oil is undoubtedly the commodity that has paid the heaviest price in this crisis and it is partly due to the inconsistency of a more than ever unpredictable MBS (Mohammad Bin Salman Al Saud). In other markets, however, the trend was downward (as indicated by CyclOpe forecasts for January 2020, which have now been well exceeded). The movement was accentuated for all industrial raw materials, the most affected being cotton (with the breakdown of the textile industries and competition from synthetics) but this was also the case, in proportions that were basically ‘logical’ for most metals, some even starting in recent weeks to play a rebound to Chinese demand. This was especially the case with iron ore, which has shown remarkable resilience throughout these weeks of crisis.


        Agricultural markets, on the other hand, ‘suffered’ from excellent harvest prospects and the disappearance of energy outlets which, for example, caused sugar prices to plummet. On the other hand, the “fear of running out” which affects both households and importing States, as well as logistical concerns linked to confinement, have caused the rise of products such as wheat and rice – a rise fuelled by export restrictions decided in Vietnam, Ukraine and Russia.


        In these strange times of retreat and globalisation in parentheses, States, without much coordination, have stormed recovery plans, in particular in the United States where an election year (Trump versus Biden) makes it even more of a requirement. However, the dollar remained firm and even appreciated.


        For the CyclOpe team, this time of confinement is marked by intense activity. The CyclOpe 2020 report, which was due to be released on 12 May, will finally be released on 9 June. It will include a long introductory chapter updating all of our data and analyses as of 1 May. However, we do not know if it will be possible to organize our traditional conference. CyclOpe members have received a weekly ‘CyclOpe Letter’ since 21 March, the publication of which will continue at least until the end of confinement in France. However, the monthly summary is lighter and the next will be published in late May.


        The coronavirus has already claimed a victim among those close to CyclOpe: Carole Brookins, a great American friend and member of the CyclOpe Circle, left us on 22 March after a long agricultural career in the United States. It’s an immense sorrow for all those who have known and appreciated her.


        In these difficult times, allow me to thank again all those who support CyclOpe, both for their membership in the Circle and for their help in the publication of the CyclOpe 2020 report (the thirty-fourth). Take care!



Philippe Chalmin


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