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Visualizing the Rise in Commodity Prices

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Rise in Commodity Prices

The Stuff that Makes Everything

If you ever wonder why commodities are important, just think of an object around you and ask yourself—what’s that made of?

From the wires in our electronic devices to the tables in our offices, these raw materials are everywhere. Of late, commodity prices have been surging as the global economy recovers, with rising demand from various industries including infrastructure, construction, and livestock.

The above infographic tracks the futures prices of 10 commodities that have seen significant price increases since January 2020.

Commodity Prices, from Bust to Boom

From lumber for home construction to metals for electronics, commodities across the three categories—agriculture, metals, and energy—have been rallying since hitting pandemic lows around March 2020.

CommodityClosing Price (Jan 1, 2020)Closing Price (May 7, 2020)% Increase
Lumber$406.7 per 1,000 board ft$1,645 per 1,000 board ft304%
Iron Ore$92.6 per tonne$197.7 per tonne114%
Soybean Oil$0.35 per lb$0.65 per lb85%
Corn$3.9 per bushel$7.3 per bushel85%
Tin$17,170 per tonne$30,950 per tonne80%
Soybeans$9.6 per bushel$15.9 per bushel66%
Copper$2.8 per lb$4.6 per lb65%
Lean Hogs$0.71 per lb$1.1 per lb56%
Palladium$1,928 per oz$2,961.5 per oz54%
Silver$18 per oz$27.6 per oz53%

Percentage increases may differ slightly due to rounding.

Among agricultural commodities, the price of lumber futures increased 304% between January 2020 and May 2021, reaching record highs. Food prices have also seen a sharp increase since the halfway point of last year. As of May 7th, the price of corn futures was at $7.3 per bushel, nearing its all-time highs of $8.3 per bushel in 2012. Furthermore, soybean oil prices were also at their highest level in the last decade.

Among metals, iron ore futures climbed 114%, reaching a record high. Tin and copper were also both moving towards all-time high prices as of May 7th, followed by palladium and silver, both of which saw more than a 50% rise in prices since January 2020.

Several commodities are either nearing or have broken past their all-time highs. Why are commodity prices increasing?

Lumber

Lumber—the form of wood that builders use to build and renovate homes—has been the talk of the town due to the massive increase in its price.

This is in stark contrast to 2019 when lumber prices were so low that some sawmill owners were better off ceasing operations. In addition to sawmill shutdowns, outbreaks of a bark-eating species of beetle have destroyed 15 years worth of log supplies in British Columbia, Canada, limiting the supply of lumber.

Meanwhile, home buyers are taking advantage of the low costs of borrowing due to record-low mortgage rates in the U.S. This is driving up the demand for lumber from the housing market, while supply is in a bottleneck.

Corn and Soybeans

Corn and soybeans are common feed grains for livestock, including swine, beef, and poultry.

China—the largest producer and consumer of pork—has been battling outbreaks of African swine fever (ASF) since 2018, losing over 100 million pigs. As the country’s hog-herd recovers from this disease, Chinese demand for corn and soybeans is increasing and supporting higher prices. In fact, China’s corn imports from the U.S. increased 2,072% between 2019 and 2020.

Iron Ore and Tin

The global economic recovery, led by China, is fueling the demand for steel, and in turn, for iron ore. On the supply side, the industry is facing a shortage, with a decline in output from top producer Vale following a disaster at its tailings dam in Brazil.

Tin prices are soaring due to rising demand from consumer electronics amid tightening supply. According to Roskill, pandemic-induced supply disruptions led to a 10% decline in refined tin output in 2020. Additionally, shipping disruptions and low stocks at the London Metal Exchange (LME) are intensifying tin’s supply squeeze.

Copper

Copper’s story is similar to that of iron ore, wherein rebounding economies are boosting demand for the red metal. However, investors are particularly bullish on copper due to its critical role in green technologies, with looming concerns over its long-term supply.

Palladium

Many countries are imposing stricter auto emission standards—and while this may surprise you, it’s driving the demand for palladium. The precious metal is a key ingredient in catalytic converters that turn toxic emissions from gas-powered vehicles into less harmful gases.

Unlike the rollercoaster rides that are commodity prices, palladium prices have been rising for five years straight. What’s more, the palladium market has seen an annual deficit since 2012. And this trend is likely to continue with flooding at palladium mines in Russia expected to cut global supply by 5% in 2021.

The Start of a Commodity Supercycle?

While it’s difficult to predict the sustainability of these high prices, the increase in commodity prices across the board has investors gearing up for a potential commodity supercycle.

Commodity supercycles are decade-long periods during which commodity prices trend above their long-term averages. The last supercycle lasted from 1996 to around 2016, driven by rapid industrialization in Brazil, India, Russia, and China (BRIC economies). Today, governments around the world are adopting mineral-intensive clean energy technologies, which will likely increase the demand for minerals for years to come.

Are we on the brink of a new commodity supercycle?

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Misc

What is the FIFA World Cup Trophy Made Of?

This infographic explores the history and composition of the FIFA World Cup trophy ahead of the 22nd edition of the competition.

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What is the FIFA World Cup Trophy Made Of?

Soccer is one of the world’s most popular sports with approximately 3.5 billion fans globally.

It was in Uruguay, in 1930, that the very first FIFA World Cup was held. It has occurred once every four years since then (except in 1942 and 1946 due to World War II).

This year, 92 years after its start, the 22nd FIFA World Cup tournament is scheduled to take place in Qatar. The highly anticipated event involves 32 national teams that will compete to win one of the most prestigious titles and a historic trophy.

So, what is the coveted FIFA World Cup trophy made up of?

The History and Composition of FIFA World Cup Trophies

Since its debut in the first FIFA World Cup tournament, in 1930, there have been two iterations of the World Cup trophy. Both trophies were made with a combination of metals and rare stones.

Until 1970, the Jules Rimet Trophy, designed by the French sculptor Abel Lafleur, glorified the winning team. A redesigned version of the trophy by Silvio Gazzaniga replaced the original in the 1974 FIFA World Cup tournament.

The Jules Rimet Trophy

Commonly called the Coupe du Monde (French for World Cup), the Jules Rimet trophy was officially renamed in 1946, honoring the then FIFA president Jules Rimet on his 25th Anniversary in office.

The trophy had a height of 35cm and weighed 3.8kg. It was made of gold-plated sterling silver and featured Nike, the Greek Goddess of Victory, holding an octagonal cup. The base of the trophy was made from a semi-precious stone called lapis lazuli. Golden plates were attached to each side of the base and they held the names of the winning teams from 1930 to 1970.

Since the beginning, it was agreed that the first team to win the World Cup three times would get to permanently keep the trophy. In 1970, Brazil marked its third victory by beating Italy in the finals and took the Jules Rimet trophy home.

However, in 1983, the trophy that even survived World War 2 was stolen from the Brazilian Football Confederation (CBF) headquarters in Rio de Janeiro and was never found. The only original piece of the Jules Rimet trophy in existence is the base that was replaced in 1954 to accommodate more winning-team names.

The FIFA World Cup Trophy

After handing over Abel Lafleur’s original trophy to Brazil in 1970, FIFA held a design competition in search of a new World Cup trophy. The association received 53 submissions from seven countries and Silvio Gazzaniga’s design of two human figures holding the Earth in their hands won the competition.

This new trophy is 36.5cm tall and weighs 6.17kg. It is made from 5kg of 18-karat gold and two layers of malachite. The base of the trophy is 13cm in diameter and the names of all winning teams since 1974 along with the years are engraved on it. This current iteration of the World Cup trophy can accommodate the names of 17 winning countries and years.

Unlike the Jules Rimet trophy, the current iteration of the trophy will not be handed over to a team definitively. It permanently belongs to the International Federation of Association Football (FIFA) and is secured at its Zurich headquarters.

However, a gold-plated bronze replica of the cup referred to as the World Cup Winners’ Trophy is given to every winning team.

Battle Royal: The 2022 FIFA World Cup

The 2022 FIFA World Cup tournament is long awaited by billions of passionate soccer fans.

It could be the final opportunity for two of the world’s best players—Cristiano Ronaldo, and Lionel Messi—to lift the World Cup trophy as they supposedly plan to retire from international games before the next World Cup.

This year, will your favorite national team be able to pose for a victory picture holding the golden trophy in their hands?

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Misc

Ranked: The World’s Top Cotton Producers

As the most-used natural fiber, cotton has become the most important non-food agricultural product.

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Top-Cotton-Producers

The Top Cotton Producers

Cotton is present in our everyday life, from clothes to coffee strainers, and more recently in masks to control the spread of COVID-19.

As the most-used natural fiber, cotton has become the most important non-food agricultural product. Currently, approximately half of all textiles require cotton fibers.

The above infographic lists the world’s top cotton producers, using data from the United States Department of Agriculture.

Fancy Fabric

Originating from the Arabic word “quton,” meaning fancy fabric, cotton is a staple fiber made up of short fibers twisted together to form yarn.

The earliest production of cotton was around 5,000 B.C. in India, and today, around 25 million tons of cotton are produced each year.

Currently, five countries make up around 75% of global cotton production, with China being the world’s biggest producer. The country is responsible for over 23% of global production, with approximately 89 million cotton farmers and part-time workers. Cotton’s importance cannot be understated, as it is the primary input for the Chinese textile industry along with many other nations’ textile industries.

Top Cotton Producers2020/2021 (metric tons)2021/2022 (metric tons)
🇨🇳 China 6,445,0005,835,000
🇮🇳 India6,009,0005,334,000
🇺🇸 United States3,181,0003,815,000
🇧🇷 Brazil2,356,0002,504,000
🇦🇺 Australia610,0001,252,000
🇵🇰 Pakistan 980,0001,306,000
🇹🇷 Turkey631,000827,000
🌐 Other 4,059,0004,282,000
Total24,271,00025,155,000

The United States is the leading global exporter of cotton, exporting three-fourths of its crop with China as the top buyer.

Despite its importance for the global economy, cotton production faces significant sustainability challenges.

The Controversy Over Cotton

Cotton is one of the largest users of water among all agricultural commodities, and production often involves applying pesticides that threaten soil and water quality.

Along with this, production often involves forced and child labor. According to the European Commission, child labor in the cotton supply chain is most common in Africa and Asia, where it comes from small-holder farmers.

In 2020, U.S. apparel maker Patagonia stopped sourcing cotton from the autonomous territory of Xinjiang because of reports about forced labor and other human rights abuses against Uighurs and other ethnic minorities.

L Brands, the parent company of Victoria’s Secret, has also committed to eliminating Chinese cotton from its supply chain. Whether these changes in supply chains impact China’s cotton production and its practices, cotton remains essential to materials found across our daily lives.

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