In the energy market, oil and gasoline continue to be the leading sources of fuel due to the immense transportation needs across the globe. As the world population continues to grow, so does the number of cars on the road and planes in the sky, which brings with it an increased need for consistent energy sources. Four of the biggest consumers of oil and gasoline are known as the BRIC economies, which stands for Brazil, Russia, India, and China.
Throughout the 12-month calendar, we see oil providers stockpiling gasoline from January to June in the Northern Hemisphere in order to prepare for the inevitable surge in demand that comes with the warmer months. Once the summer hits and people decide to set off on their holidays, the consumption of oil and gasoline goes through the roof.
This increased demand in the summer months can have an impact on the volatility of the market. If the oil and gasoline supply chains are disrupted in any way, the price of what available energy there is will always be expected to spike. The same can also be said of any delays during the winter months, including refineries freezing or snowstorms preventing deliveries. The energy market is a global market, which means there are plenty of links along the supply chain that can result in volatility.
After gasoline, the second biggest energy product created from a barrel of crude oil is heating oil, also referred to as No. 2 oil. This is the energy we used to heat many of our homes, and around one-quarter of every barrel is used to create heating oil. For winter heating in North-Eastern US, heating oil makes up around 80% of all usage. Heating oil is also distributed across Europe, Russia, and Canada – all of which have differing climates.
Between June and October, which is the warmest period of the year (on average), oil providers begin stockpiling heating oil in preparation for the winter cold. Once again, the spike in demand once the weather turns colder can create volatility if there is a disruption to the supply chain. What heating oil is available would be expected to spike in price. For example, a hurricane in the Caribbean Sea could impact oil refineries which in turn can damage supply and increase prices.
Corn is the number one grain used to feed farm animals, such as cattle, and so is an important part of the food supply chain. It is also used to make ethanol in the US, which is an ingredient used in the production of other products, including gasoline and corn syrup.
Between the middle of summer and the corn harvest season, corn prices often experience their biggest decline. As a huge influx of corn comes into the market between September and November, the supply increases and the price decrease until they hit rock bottom between December and February.
On the flip side, corn prices are often at their peak in June and July due to a level of uncertainty over the next crop production cycle. We see a period of volatility between April and August, which is when corn is planted and grown. This is because there is a low margin for error when planting corn, and mistakes can lead to a drop in supply. If this happens, the demand for the remaining corn increases and the prices spike.
After iron and aluminium, copper is the third most used metal in the world. Its main uses fall within the construction and machinery industries. Copper is such an important cog in the global machine that it can directly reflect the condition of the world economy.
Copper mining is controlled by the governments in various countries, meaning it can be impacted by politics. You source copper via high-volume mining, which is designed to be as cost-efficient as possible. Humans have been mining it for around 7,000 years, making it one of the oldest metal commodities.
Aluminium is used across a number of different industries thanks to its lightweight properties, and the fact it does not corrode. We have seen it used in everything from everyday packaging for fizzy drinks to aerospace applications. However, the biggest aluminium user in the United States is the transportation industry, which uses around 30% of the US supply. Construction makes up 10% and containers/cans 20%. Did you know that transmission lines are also made from aluminium?
Gold has long since been viewed as a signal of wealth across the world, with India being one of the largest global consumers. However, thanks to a change in regulations, China is also seeing a rising demand for gold, levelling with India as the largest consumer. The middle class in China is growing thanks to a thriving economy, and some predict the gold demand to double in the country over the next 10 years. The demand for gold investment in China has increased by 70% since 2010, while jewellery made up 64% of Chinese gold demand.
Across the world, December and February are the most popular months for gift-giving, with holidays such as Christmas, Thanksgiving, Valentine’s Day, and Indian festivals. Of course, jewellery is a very popular option when it comes to gift giving. As such, jewellery providers start to stockpile between June and the end of November in order to cope with the surge of demand between December and February. The increased demand can lead to higher prices.
Amidst worries over the global economy and inflation, gold has been seen as a safe-haven investment in recent years as it holds value. This is even more prevalent now that tangible assets are popular portfolio diversification tools.
Platinum is the prime member of the platinum metal group, which also includes rhodium, iridium, palladium, osmium, and ruthenium. All six of these metals are very important industrial materials thanks to their unique properties. However, jewellery is actually the main platinum demander, making up 51% of all usage. The metal is also used in automotive catalysts (29%) and petroleum refining catalysts (13%). High-tech electronics (7%), such as computers, use platinum because it does not corrode and does not tend to react significantly with other metal materials.
Despite how important it is, platinum is actually one of the rarest metals on Earth, with around 5 million troy ounces being mined each year – compared to 547 million ounces and 82 million ounces for silver and gold respectively. South Africa is the main supplier of platinum at 80%, while Russia (11%) and North America (6%) also contribute.
Platinum prices are known to be volatile due to the high demand but low supply, which is why it can attract investment.
One of the most popular drinks on the planet. Every single year, across the world, 400 billion cups are drunk, with most of the beans coming from Colombia, Vietnam, and Brazil. Brazil is the major player, with over 33% of all coffee coming from the South American country.
However, with such a heavy reliance on one country, any disruptions to the Brazilian supply chain can cause a ripple effect. Brazil is known to suffer from occasion typhoons, frostbites, pest problems, diseases, and more – all of which can impact the price of coffee. Prices usually go up between November and May ahead of the Brazilian frost season from May to August.
The majority of Robusta coffee comes from Vietnam, which is then used to create instant coffee all around the world. Harvest runs from October to January, and any heavy rain or typhoon can cause disruption to the harvest, export, and subsequent price.
Coffee is consumed more in the Northern Hemisphere during winter, so the seasons also have an influence on the demand for coffee. Prices may spike if there are any disruptions during peak export season, especially when demand is at its highest.
One of the world’s favourite ingredients. Cake, chocolate, cookies, you name it – the vast majority of them use sugar by the scoop. This is even more the case during big celebrations such as Christmas, Jewish holidays, Thanksgiving, Easter, and more. Because of the Christmas influence, sugar prices usually peak in December when demand is highest.
Brazil is one of the largest sugar producers in the world, with production running for seven months of the year, with the only gap falling between December and April. However, European sugar crops are not on the market at Christmas time. Those in the Northern Hemisphere usually see sugar demand peak in the autumn/fall.
If there are delays or disruptions during the peak sugar seasons in the fall and around major holidays, prices would be expected to spike.
Meat prices can change through the season depending on the supply and demand of certain animals. Steak demand is often higher in the spring and summer, while people tend to prefer beef during warm weather for barbeques and events outside.
Between March and May, the slaughter of animals slows down, which in turn slows the supply down. This is largely due to the birth cycles on farms, but can create volatile prices as the industry builds its way back up to peak spring and summer season. The cost of things like corn, which is used to feed many animals, can also impact meat prices.
Between July and September, the market is flooded with cattle supply which in turn brings a whole lot of beef. Once the barbeque season finishes in October time, there is often still a healthy stock of beef on the market, making for high supply and low demand.
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