1 Introduction

2020 ◽  
Author(s):  
Liebi Martin ◽  
Markham Jerry W ◽  
Brown-Hruska Sharon ◽  
De Carvalho Robalo Pedro ◽  
Meakin Hannah ◽  
...  
Keyword(s):  
Price Discovery ◽  
Supply And Demand ◽  
Commodity Prices ◽  
Financial Assets ◽  
Financial Instruments ◽  
Market Participants ◽  
Derivative Markets ◽  
The Impact ◽  
Buying In

This introductory chapter provides a background and an overview of commodities trading. The trade of commodities is the earliest and most basic form of commerce. A central tenet in economics theory, the act of trade or ‘exchange’ of a commodity occurs at the intersection of supply and demand and also where the price or exchange rate is determined. Since commodity prices change based on myriad factors, the volatility of commodities prices is the raison d'etre of why derivatives developed. Derivative markets perform two essential functions: price discovery and hedging. Price discovery is important because it allows market participants to value their financial assets without actually having to sell those items. Hedging is also important because it allows a market participant to offset risks from exposure to financial instruments in its portfolio or that it anticipates buying in the future. The chapter then looks at the rationale for the regulation of trading in commodities-related financial instruments as well as the impact of Brexit on the regulation of commodities trading in Europe.

Business environment review 2020

2021 ◽  
Vol 61 (2) ◽  
pp. 347
Author(s):  
Simon Molyneux
Keyword(s):  
Carbon Emissions ◽  
Oil And Gas ◽  
Supply And Demand ◽  
Petroleum Industry ◽  
Commodity Prices ◽  
Oil And Gas Industry ◽  
Business Environment ◽  
Gas Industry ◽  
The Impact ◽  
Oil Gas

The petroleum (oil, gas and LNG) business environment in 2020 was adverse. Two factors disrupted the foundations of the global oil and gas industry. First, the COVID-19 global pandemic caused an unprecedented reduction of demand that combined with high levels of production resulted in oversupply of oil, gas and LNG. This gap between supply and demand resulted in a collapse in commodity prices, reduced revenues and cancelling or deferral of investment. Second, societal awareness of the impact of climate change on planet Earth increased. Pressure to reduce carbon emissions and a concomitant societal-shift against carbon-emissions intensive petroleum-based forms of energy generation intensified. Many major players in the petroleum industry re-framed their strategies to focus on energy supply in general and in some cases plan to cease their exploration, development and production activities in the coming decades. In Australia, in part global factors manifested in the deferral of investment decisions on three LNG investments. The Australian Government signalled that gas developments would be a critical part of Australia’s post-COVID recovery and that management of abandonment and decommissioning liabilities would be a factor in the approval of transactions leading to a change in ownership. This paper will describe each of the factors faced by the industry in 2020 and frame the issues facing the petroleum industry in 2021 and beyond.

scholarly journals Research on Key Factors Affecting Power Supply and Demand Trend Based on Complex Correlation

2020 ◽  
Vol 165 ◽  
pp. 06022
Author(s):  
Dunnan Liu ◽  
Rui Ge ◽  
Pengfei Li ◽  
Hua Li ◽  
Shanzhe Shi ◽  
...  
Keyword(s):  
Supply And Demand ◽  
Two Dimensions ◽  
Key Factors ◽  
Factors Affecting ◽  
Market Participants ◽  
Key Factor ◽  
Complex Correlation ◽  
Rule Analysis ◽  
The Impact ◽  
Big Data Technology

The market behaviors of the supply and demand sides in the power market are the issues that market participants, operators and regulators are most concerned about. This article starts from the two dimensions of power generation market behavior and demand market behaviour, analyzes the impact of power transaction behavior on supply and demand trend changes, and then studies the function of big data technology in correlation analysis. The qualitative data is converted into quantitative data, and then gray rule analysis and correlation coefficient analysis are used to mine association rules. The results show that demand response is the key factor that affects the change of load trend.

scholarly journals Financial speculation impact on agricultural commodity price volatility: TGARCH approach

2020 ◽  
Author(s):  
Algirdas Justinas Staugaitis ◽  
Keyword(s):  
Commodity Prices ◽  
Price Volatility ◽  
Commodity Price ◽  
Agricultural Commodity ◽  
Exogenous Factor ◽  
Market Participants ◽  
Financial Speculation ◽  
Commercial Market ◽  
Commodity Price Volatility ◽  
The Impact

Motivated by agricultural commodity price fluctuations and spikes in the last decade, we investigate whether financial speculation destabilizes the price of agricultural commodities. The aim of this research is to assess the impact of financial speculation on agricultural commodity price volatility. In our study we use weekly returns on wheat, soybean and corn futures from Chicago Mercantile of Exchange. To measure this impact, we apply autoregressive conditional heteroskedasticity (ARCH) technique. We also propose a model with seasonal dummy variables to measure if financial speculation impact on price volatility differs among seasons. The results of our research indicate that financial speculation as an exogenous factor has either no effect or reduces the volatility of the underlying futures prices. Therefore, we conclude that the increase of non-commercial market participants does not make the agricultural commodity prices more volatile or this link is at least questionable.

scholarly journals COVID-19 and the Global Mining Industry

SEG Discovery ◽  
2020 ◽  
pp. 33-41
Author(s):  
Simon M. Jowitt
Keyword(s):  
Supply Chains ◽  
Supply And Demand ◽  
Mining Industry ◽  
Commodity Prices ◽  
Mining Operations ◽  
Mining Sector ◽  
Supply Chain Disruptions ◽  
Demand Growth ◽  
Global Nature ◽  
The Impact

Abstract The world is currently experiencing a rapid and deep economic slowdown as a result of COVID-19 mitigation efforts. The depth and global nature of this recession, which could turn into a depression, suggests that this pandemic will significantly affect the demand for metals and the global mining sector. The majority of governments consider mining to be essential, meaning that the effect of mitigation on the mining industry and on metal production has been minimal to date. However, increases in metal stocks and decreases in metal prices suggest that the mining industry will be negatively affected by the COVID-19 crisis, at least in the short term. This paper presents an overview of the effects of COVID-19 mitigation on the mining sector to date. That includes variations in metal and commodity prices and stocks during the crisis and the outlining of two possible scenarios for COVID-19 related impacts. The first involves persistent supply-chain disruptions, where metal supply is restricted by logistical or COVID-19–related mitigation impacts on intermediates such as smelters and refiners. This restriction of supply could cause higher metal prices but also could cause issues with demand for ores and concentrates that negatively affect individual mining operations. More likely is a second slower demand growth scenario in which a global decrease in demand for metals causes further lowering of metal prices with associated negative economic impacts on mining operations. However, further research into global metal supply chains and the impact of the COVID-19 crisis on individual metals is needed. Key remaining unknowns include the influence of mitigation efforts on global metal supply and demand, the effect of these efforts on metal prices, and the geography of supply chains.

scholarly journals IMPACT OF THE EUROPEAN PAYMENT INDEX ON KEY MACROECONOMIC AND SOCIAL INDICATORS OF A COUNTRY

2014 ◽  
Vol 12 (1) ◽  
pp. 60-73
Author(s):  
Ingrida Grigonytė ◽  
Nijolė Maknickienė
Keyword(s):  
Regression Analysis ◽  
Social Indicators ◽  
Causal Relationships ◽  
Financial Instruments ◽  
Tax System ◽  
Market Participants ◽  
Correlation And Regression Analysis ◽  
Business Units ◽  
National Tax ◽  
The Impact

The EPI (European Payment Index) reflects the debt risk of corporations in each EU country. This index is widely used for evaluation of the ability of a business to settle with market participants. This article seeks to identify the impact of the EPI on national macroeconomic and social indicators in order to assess the impact made by late payments among business units on the economy of Lithuania. The findings reveal the macroeconomic and social indicators that are most affected by the EPI. Correlation and regression analysis helps to find causal relationships and allows the risks of financial processes in enterprises to be assessed; to reform the national tax system responsibly; and to find appropriate financial instruments to manage late payment threats.

scholarly journals Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate

2013 ◽  
Vol 103 (6) ◽  
pp. 2265-2295 ◽  
Author(s):  
Michael J Roberts ◽  
Wolfram Schlenker
Keyword(s):  
Supply And Demand ◽  
Commodity Prices ◽  
Agricultural Commodities ◽  
Renewable Fuel Standard ◽  
Renewable Fuel ◽  
Demand Elasticities ◽  
The Us ◽  
Ethanol Mandate ◽  
The Impact ◽  
New Framework

We present a new framework to identify supply elasticities of storable commodities where past shocks are used as exogenous price shifters. In the agricultural context, past yield shocks change inventory levels and futures prices of agricultural commodities. We use our estimated elasticities to evaluate the impact of the 2009 Renewable Fuel Standard on commodity prices, quantities, and food consumers' surplus for the four basic staples: corn, rice, soybeans, and wheat. Prices increase 20 percent if one-third of commodities used to produce ethanol are recycled as feedstock, with a positively skewed 95 percent confidence interval that ranges from 14 to 35 percent. (JEL Q11, Q16, Q42, Q48)

Investment Bankers in Conflict: The Regime of Inducements in MiFID II and the Member States’ Struggle for Fairness

2016 ◽  
Vol 2016 (4) ◽  
Author(s):  
George A. Papaconstantinou
Keyword(s):  
Financial Institutions ◽  
Conflicts Of Interest ◽  
Financial Instruments ◽  
Gold Plating ◽  
Investment Bankers ◽  
Market Participants ◽  
Retail Investors ◽  
The Uk ◽  
The Impact ◽  
The Eu

AbstractThis article sheds light on the new legal treatment of inducements, under the revised Markets in Financial Instruments Directive, and seeks to address the question whether or not that regime is beneficial for market participants. Inducements constitute a common practice of day-to-day conduct of business by financial institutions. Accordingly, the rules that define their realm of operation are quintessential for both investment firms and investors. The relevant paradigm of conflicts of interest is used. MiFID II has to be implemented only by 3 January 2018. However, the forthcoming regime on inducements derives from gold-plating practices that are already in place in the UK. An examination and assessment of the impact of inducements policy and their adverse effect on retail investors in the UK is an adequate apparatus to draw parallels from. After highlighting the inherent problems of the EU provisions on inducements, an enhanced framework is designed.

Reducing the Risks of the Financial Sector to Ensure Sustainable Growth of the Russian Еconomy

2019 ◽  
Vol 12 (3) ◽  
pp. 86-92
Author(s):  
T. I. Minina ◽  
V. V. Skalkin
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Financial Sector ◽  
Developed Countries ◽  
Sustainable Growth ◽  
Necessary Condition ◽  
Real Sector ◽  
Financial Instruments ◽  
The Real ◽  
The Impact

Russia’s entry into the top five economies of the world depends, among other things, on the development of the financial sector, being a necessary condition for the economic growth of a developed macroeconomic and macro-financial system. The financial sector represents a system of relationships for the effective collection and distribution of economic resources, their deployment according to public demand, reducing the risk of overproduction and overheating of the economy.Therefore, the subject of the research is the financial sector of the Russian economy.The purpose of the research was to formulate an approach to alleviating the risks of increasing financial costs in the real sector of the economy by reducing the impact of endogenous risks expressed as financial asset “bubbles” using the experience of developed countries in the monetary policy.The paper analyzes a macroeconomic model applied to the financial sector. It is established that the economic growth is determined by the growth and, more important, the qualitative development of the financial sector, which leads to two phenomena: overproduction in the real sector and an increase in asset prices in the financial sector, with a debt load in both the real and financial sectors. This results in decreasing the interest rate of the mega-regulator to near-zero values. In this case, since the mechanisms of the conventional monetary policy do not work, the unconventional monetary policy is used when the mega-regulator buys out derivative financial instruments from systemically important institutions. As a conclusion, given deflationally low rates, it is proposed that the megaregulator should issue its own derivative financial instruments and place them in the financial market.

Global Food Commodity Prices and Domestic Food Inflation: Some Insights from Morocco

New Medit ◽  
2020 ◽  
Vol 19 (3) ◽  
Author(s):  
Ahmed EL GHIN ◽  
Mounir EL-KARIMI
Keyword(s):  
Exchange Rate Regime ◽  
Commodity Prices ◽  
Food Prices ◽  
Consumer Prices ◽  
Floating Exchange Rate ◽  
Pass Through ◽  
The Impact ◽  
Food Inflation ◽  
Global Food ◽  
Domestic Food

This paper examines the world commodity prices pass-through to food inflation in Morocco, over the period 2004-2018, by using Structural Vector Autoregression (SVAR) model on monthly data. Several interesting results are found from this study. First, the impact of global food prices on domestic food inflation is shown significant, which reflects the large imported component in the domestic food consumption basket. Second, the transmission effect is found to vary across commodities. Consumer prices of cereals and oils significantly and positively respond to external price shocks, while those of dairy and beverages are weakly influenced. Third, there is evidence of asymmetries in the pass-through from world to domestic food prices, where external positive shocks generate a stronger local prices response than negative ones. This situation is indicative of policy and market distortions, namely the subsidies, price controls, and weak competitive market structures. Our findings suggest that food price movements should require much attention in monetary policymaking, especially that the country has taken preliminary steps towards the adoption of floating exchange rate regime.

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