Autumn is here. Wherever you look, there are people with the wind in their sails. We are on course for the 4th quarter, but first let’s have a little glance astern, so that we can securely lash your organisation’s goals to the sector’s challenges.
Challenge 1: Commodity Price Volatility Remains Low
Across the globe, the winds have been blowing commodity prices in opposite directions: they are still heading up for industrial commodities, particularly energy products and metals, but are noticeably down for agricultural products. Under the threat of Harvey and Irma, demand for fuel has picked up throughout the southeastern US. In an ironic twist of fate, Mother Nature, by creating fear of shortages and damaging US refineries, has lent a helping hand to OPEC members and other producer countries in their efforts to restrict the oil supply.
The result is petrol and natural gas prices that are modestly but tangibly higher. Time will tell whether that lasts. Another result of the hurricanes in the Americas is a sharp rise in the price of US orange juice. That is hardly surprising when you take into account that Florida is the country’s largest orange producer. Irma has turned frozen orange juice into a juicy market.
Challenge 2: the Emerging Economies Are Calling the Shots
The South’s macroeconomic decisions are weighing down on the situation in the North and on world trade. It is a growing trend. The level of Chinese consumer spending is having a knock-on effect on demand for goods at global level, while rising volumes of trade in East Africa and the spread of free trade across the continent are creating a new pool of consumers.
Even in “little” Geneva, the rolling back of the colossus that is the Chinese state is the talk of the town, with much ink being spilled over the sector’s future. However “emerging” they may be, these economies are changing the game in the so-called “developed” economies.
Challenge 3: the Clash of Egos between the United States and North Korea.
It is – or is close to – threatening the fragile equilibrium in the Korean peninsula and Northern Asia. That region alone accounts for 84% of global trade in oil, iron ore, liquefied natural gas and soy. What else is there to say?
Challenge 4, and It Is a Tricky One:
Alter-globalisation NGOs are pushing the authorities towards further regulation of the private sector, governments to intervene more in markets, and the business world to be more transparent and to set more of an example in terms of social responsibility. There is more need than ever for a firm hand on the tiller of governance.