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Short sugar and coffee

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Short sugar and coffee The abolition of the sugar production quota in Europe next October will weigh on global prices.

ETF Securities Commodity Research Short sugar and coffee

Highlights

  • Speculative positioning in both sugar and coffee appear over-extended.
  • Brazil’s sugar production has risen and a healthy monsoon in India paves the way for a partial recovery in cane production.
  • The abolition of the sugar production quota in Europe next October will weigh on global prices.
  • Brazilian Arabica coffee output hit an all-time high in 2016, but prices rose as a result of Brazilian Real appreciation.
  • With La Niña potentially back on the cards and weather in Brazil remaining favourable, the next season’s Arabica crop may surprise on the upside.

Sugar rally to run out of steam

Sugar has gained over 80% since February 2016 as the market is expected to have entered a second consecutive year of a production deficit. Prices are now trading at a 5-year high.

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The futures market has become very bullish. Net long positioning in the futures market hit an all-time high a few weeks ago and remains more than 2 standard deviations above its 5-year historic average.

We believe that this optimism is overdone. Sugar production in Brazil, which produces close to 25% of global output, is running close to 20% higher than last year. While there is some fear that the season could be cut short, we believe that higher prices will encourage mills to continue production. Indeed, the cane harvest, which is close to 70% complete, is also running 10% ahead of last year. Moreover, with sugar prices this high and weakness in oil prices, more cane could be diverted to sugar production over ethanol production.

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India, the second largest producer of sugar, has received normal levels of rain this monsoon in contrast to the previous year’s failed monsoon. Reservoir levels have filled to around 75% as of October 20th, which is exactly in line with the 10-year average for this time of the year (and 128% of the corresponding period last year). Reservoir levels in the key cane producing areas was even higher. With most cane in India being irrigated, availability of reservoir water will be important for the following season.

EU to scrap sugar beet production quota

The EU is set to abolish its sugar beet production quota in October 2017. While the ICE Sugar No. 11 futures contract is based on the delivery of raw cane sugar, the greater availability of a close substitute could impact its price. Although the EU will eliminate quotas on production of sugar beet, it is not set to change tariffs on the import of raw cane sugar. Refiners in the EU are therefore more likely to use domestic beet for sugar production. While this is more of a concern for next year, prices of raw cane sugar could begin to weaken in advance.

Arabica price rises despite Brazilian production increase

Arabica coffee prices have risen close to 40% since January and speculative positioning is over 1 standard deviation above historic average.

Brazil dominates Arabica coffee production and has a significant influence on the price of the commodity.

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2016 Arabica coffee output from Brazil was the highest on record despite the fears that El Niño would hamper production. The Arabica harvest in Brazil was largely complete in September.

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As the chart above indicates, coffee output in Brazil goes through biennial cycles: production rises in one year and falls in the next. The 2016 coffee crop in Brazil was a high year in the biennial cycle and 2017 will be a low year. Some of the recent price gains may reflect that we are about to enter a cyclical low year, but we caution that the pattern does not always hold (for example between 2012 and 2013).

We believe that more of the gains were driven by an appreciating Brazilian Real. The Real appreciated on the back of an impeachment of the Brazilian President. Barring any positive economic shock, we believe that most of the positive news for the Real is priced-in.

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Potential for favourable weather

Weather conditions may have turned favourable for production in Brazil. Currently rain is progressing well in the south east of Brazil (where close to 90% of its Arabica is grown). That is important during the critical ‘flowering’ process. The amount of flowering determines how much coffee cherries will develop on each coffee bush.

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Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

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AINJ ETP spårar INJ och skapar staking intäkter

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21Shares Injective Staking ETP (AINJ ETP) med ISIN CH1360612134 är 100 procent fysiskt uppbackad. 21Shares Injective Staking ETP (AINJ) spårar prestanda för INJ samtidigt som den skapar staking intäkter som återinvesteras i ETP för förbättrad prestanda. Medan blockchain-nätverk vanligtvis är siloförsedda, stöder Injective Protocol sömlösa interaktioner över stora nätverk, vilket möjliggör ett unikt utbud av finansiella produkter och tjänster. 21Shares Injective Staking ETP erbjuder ett enkelt, reglerat och transparent sätt att dra nytta av nätverkets växande betydelse inom decentraliserad finans (DeFi).

21Shares Injective Staking ETP (AINJ ETP) med ISIN CH1360612134 är 100 procent fysiskt uppbackad. 21Shares Injective Staking ETP (AINJ) spårar prestanda för INJ samtidigt som den skapar staking intäkter som återinvesteras i ETP för förbättrad prestanda. Medan blockchain-nätverk vanligtvis är siloförsedda, stöder Injective Protocol sömlösa interaktioner över stora nätverk, vilket möjliggör ett unikt utbud av finansiella produkter och tjänster. 21Shares Injective Staking ETP erbjuder ett enkelt, reglerat och transparent sätt att dra nytta av nätverkets växande betydelse inom decentraliserad finans (DeFi).

Fördelar

Innovativ teknik: Injective erbjuder ett avancerat DeFi-ekosystem med funktioner som noll gasavgifter och omedelbar slutgiltig transaktion, vilket förbättrar användarupplevelsen på finansiella kryptoapplikationer.

Staking med lätthet: Med AINJ kan investerare få tillgång till r med fördelen av professionell riskhantering samtidigt som de undviker behovet av att direkt låsa tillgångar.

100 % fysiskt uppbackad: 21Shares Injective Staking ETP är 100 % fysiskt backad av den underliggande INJ och förvaras i kylförvaring hos ett institutionellt förvaringsinstitut, vilket erbjuder ett bättre skydd än depåalternativ som är tillgängliga för enskilda investerare.

Nyckelinformation

Handla AINJ ETP

21Shares Injective Staking ETP (AINJ ETP) är en börshandlad kryptovaluta (ETP) som handlas på Euronext Amsterdam.

Euronext Amsterdam är en marknad som få svenska banker och nätmäklare erbjuder access till, men DEGIRO gör det.

Börsnoteringar

BörsValutaKortnamn
Euronext AmsterdamUSDAINJ NA
Euronext ParisEURAINJ FR

Produktinformation

Namn21Shares Injective Staking ETP
Lanseringsdatum9 juli 2024
Emittent21Shares AG
Förvaltningsarvode2,5%

Handelssymboler

KortnamnAINJ
Valor136061213
ISINCH1360612134
ReutersAINJ.S
WKNA4AHQC
BloombergAINJ BW

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Mexico’s post-election potential and investment opportunities

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Given Mexico’s vast potential and President-elect Claudia Sheinbaum’s track record of progress during her time as mayor of Mexico City, Franklin Templeton’s Dina Ting thinks that investors should be monitoring opportunities to enter this compelling market.

Given Mexico’s vast potential and President-elect Claudia Sheinbaum’s track record of progress during her time as mayor of Mexico City, Franklin Templeton’s Dina Ting thinks that investors should be monitoring opportunities to enter this compelling market.

Just how well—or not so well—Mexico’s President-elect Claudia Sheinbaum may be able to tackle the country’s prevailing challenges is still up for debate. Sheinbaum’s commanding margin of victory in the June election discouraged some investors amid fears that her ruling Morena party could potentially push through constitutional reforms that may adversely impact Mexico’s business environment.

Since the outcome of the US presidential election will remain undecided for a month after Sheinbaum takes office in October, we expect Mexico’s equity markets to experience more short-term market volatility. But given Mexico’s ongoing potential to capitalize on nearshoring investments and Sheinbaum’s track record of progress during her time as mayor of Mexico City (beginning in 2018), we think investors should be monitoring opportunities to enter this compelling market. We believe a continuation of US macro drivers are still poised to drive Mexican exports. Although US appetite for Chinese imports was still high even as recently as 2022, the drop-off in trade with China since then has benefited Mexico, which recently eclipsed both China and Canada to become the biggest US trade partner.

Mexico’s first female president

A protégé of outgoing President López Obrador (or AMLO as he is known), Sheinbaum has pledged to continue along the political course of her predecessor. But as a climate scientist with a Ph.D. in environmental engineering, she appears to us to be more attuned to pressing issues, such as Mexico’s water woes and efforts toward the energy transition. She has demonstrated deep, technical expertise and perspective on vital issues—“not simply as stewardship of natural resources, but also as an issue interconnected with education, social justice, health care, housing and infrastructure,” according to the think tank Atlantic Council.

There is hope that the public-private partnerships that Sheinbaum advanced during her time as Mexico City’s mayor could be a model that she adopts and adapts in her new administration to increase the number of strategic projects. These may include opening natural gas production and transportation to private participants, boosting infrastructure and more renewable energy projects that are critical for Mexico to take advantage of nearshoring-related investment opportunities.

Since renewables like solar and wind currently make up only about 12% of the electricity mix in Mexico (significantly lagging the 16% share for the United States), there is great potential for the country’s clean energy buildout. Sheinbaum has pledged to change course from AMLO in her approach to speeding the promotion of renewable energies with a US$13.6 billion investment plan through 2030 that includes pioneering development of smart grids and other green technologies. Experts have praised Sheinbaum’s methodical approach to governance, for example, bringing stability and predictability to regulatory frameworks with her technical background and reliance on seasoned advisors.

Among some of the moderate-to-high risks for Mexico is public security and crime. Here again, Sheinbaum’s approach in working with US counterparts during her tenure in Mexico City has been applauded. Her cabinet picks for key positions thus far present an even gender distribution and draw from academia and her mayoral administration—in a bid to repeat the successes in crime-fighting she achieved during her years as mayor. These include veteran politicians Omar Garcia Harfuch for Security Minister, Marcelo Ebrard for Secretary of Economy and Alicia Barcena for Secretary of Foreign Affairs.

Mexico poised for economic growth

Over the near term, Mexico is expected to achieve a 2% growth rate—higher than its 20-year average.4 Although Mexico’s headline inflation accelerated beyond analyst expectations in June, its strong trend of domestic demand and high consumer confidence should also offer some economic momentum, in our opinion. For example, June auto sales were up 8.3% from a year earlier, according to government data.

It’s also important to recognize that Mexico is the second-highest receiver of remittances—transfers of money from migrants working abroad—in the world, behind only India. For the decade leading up to 2020, the percentage of households in Mexico that received remittances rose to 5.1% from 3.6% in 2010. Last year, remittances to Mexico notched a 7.6% increase, hitting a record US$63 billion, due to a strong US labor market.

Exhibit 1: Mexico Consumer Confidence

Exhibit 2: Mexico Real Gross Domestic Product (GDP) Forecast

Investors seeking exposure to Mexico’s market through broad emerging market indexes, like the MSCI Emerging Market (EM) Index, gain less than a 3% weighting to Mexico. And while China’s dominant share of the benchmark is lower now than in recent years, it still presents a 25% weighting, which may be more than investors want. In our opinion, single-country exchange-traded funds offer a compelling way for investors to layer targeted access to a country’s large- and mid-sized companies at a low cost.

As of the end of June, Mexico’s main benchmark stock index, the IPC, held a 33% weighting in the consumer staples sector. Materials and financial sector stocks make up the next biggest weighting at about 19% each.

As Mexico continues to play a larger role in global supply chains, investors should note corporate nearshoring progress as gauged by the country’s foreign direct investment (FDI) trends. At the end of 2023, Mexico ranked ninth among the world’s largest recipients of FDI, receiving investments of US$36 billion—about 2% more than in the prior year. Longer term, we believe nearshoring efforts, to diversify and improve the security of supply chains, remain a key tailwind for Mexico’s economy and markets.

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JPGR ETF investerar i amerikanska tillväxtaktier

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JPMorgan Active US Growth UCITS ETF - USD (acc) (JPGR ETF) med ISIN IE0005CH3U28, är en aktivt förvaltad ETF som investerar i amerikanska tillväxtaktier och strävar efter att generera en högre långsiktig avkastning än Russell 1000 Growth-index. Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning).

JPMorgan Active US Growth UCITS ETF – USD (acc) (JPGR ETF) med ISIN IE0005CH3U28, är en aktivt förvaltad ETF som investerar i amerikanska tillväxtaktier och strävar efter att generera en högre långsiktig avkastning än Russell 1000 Growth-index. Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,49 procent p.a. JPMorgan Active US Growth UCITS ETF USD (acc) är den billigaste ETF som följer JPMorgan Active US Growth-index. ETF:n replikerar det underliggande indexets prestanda genom full replikering (köper alla indexbeståndsdelar). Utdelningarna i ETFen ackumuleras och återinvesteras.

JPMorgan Active US Growth UCITS ETF USD (acc) är en mycket liten ETF med 4 miljoner euro under förvaltning. ETF lanserades den 18 januari 2024 och har sin hemvist i Irland.

Möjlighet

Erfaret portföljförvaltningsteam med i genomsnitt 30 års branscherfarenhet

Utnyttja de bästa idéerna från JPMorgans dedikerade tillväxtforskningsteam, förutom grundläggande insikter från över 20 amerikanska aktiekarriäranalytiker, alla med i genomsnitt 20+ års branscherfarenhet

Portfölj

Kombinerar två av JPMorgans beprövade aktiva amerikanska aktiestrategier (tillväxt med stora bolag och tillväxtfördelar), som kombineras för att leverera en diversifierad portfölj av amerikanska tillväxtaktier med underskattad tillväxtpotential över sektorer.

Resultat

Aktivt förvaltad investeringsstrategi som strävar efter att leverera en stilren tillväxtaktieportfölj med en viss grad av marknadskapitalflexibilitet

Investeringsmål

Delfonden strävar efter att uppnå en långsiktig avkastning som överstiger Russell 1000 Growth Index (Netto Total Return of 30% källskatt på utdelning) (”riktmärket”) genom att aktivt investera främst i en tillväxtstilsorienterad portfölj av amerikanska företag .

Handla JPGR ETF

JPMorgan Active US Growth UCITS ETF – USD (acc) (JPGR ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
Borsa ItalianaEURJGRO
London Stock ExchangeGBXJGOR
London Stock ExchangeUSDJGRO
SIX Swiss ExchangeUSDJGRO
XETRAEURJPGR

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