Thank You from The Triumvirate

The team is deeply grateful to our readers for the incredible support and growth we’ve experienced since launching our research letter in late August. Interest in commodity and currency markets continues to expand, and global monetary policy remains a central topic in financial media with easing cycles taking hold this year.

The Triumvirate team is excited to keep delivering weekly insights on these themes and hopes you’ve enjoyed our editions so far. Totaling 14 editions, and since gaining its first subscriber in late August of this year, readers have consumed over 29.8 thousand words written for The Triumvirate —the equivalent of reading Of Mice and Men by Steinbeck. We remain active on Instagram and X, where you can find more of our finance-focused content. Enjoy this week’s piece on the top headlines of 2024.

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Terminal Time Warp

Launch the terminal as we review some of the top headlines on commodities, forex, and central banks for 2024. Check out our past editions where we covered a few of these topics in greater detail.

TOP CMD <GO>

Coffee and Cocoa Prices Reach Records

• Cocoa prices surged 66% to reach historic highs of $12,500 per ton marking a 206% increase in 2024, driven by severe shortages from weather damage and disease in West Africa.

  • Cocoa prices have risen over 24% in December alone, amid growing concerns about supply shortages during the holiday season.

  • Disruptions in Ghana and the Ivory Coast have led to a 15% decline in cocoa arrivals compared to 2022. Heavy rains in the Ivory Coast's southwestern regions have damaged crops and delayed transport to ports.

• Coffee futures jumped Arabica coffee futures hit an all-time high of $3.48 per pound, marking an 80% increase in 2024.

  • Current prices have surpassed the previous 1977 record of $3.35 per pound, reaching levels not seen in nearly five decades.

  • Brazil, the world’s largest coffee producer, faced its worst drought in decades, followed by heavy rains in October, significantly impacting crop yields. Brazil accounts for nearly 39% of the global coffee supply.

Oil Remains Volatile

• Global oil markets saw historic shifts in 2024, with production hitting a record 103 million barrels per day, thanks to the surging output from non-OPEC+ countries like the U.S., Brazil, and Guyana. Latin America played a pivotal role, with production reaching 9 million b/d—the region's highest since 2016—driven by Brazil’s pre-salt fields and Guyana’s expanding offshore developments. However, this unprecedented supply clashed with waning demand from China, where economic challenges and the rapid adoption of electric vehicles caused oil demand growth to slow to just 490,000 b/d, marking four consecutive months of decline.

• Amid these dynamics, OPEC+ maintained significant production cuts of 3.66 mb/d, though the group began phasing out 2.2 mb/d of these reductions in October. These actions sought to stabilize markets but struggled against price volatility. Brent crude started the year averaging $84 per barrel, peaked at $89 mid-year due to inventory drawdowns, and closed at $74.5 as weaker demand pressures mounted. Geopolitical tensions further fueled market instability, with Middle East conflicts, shipping disruptions in the Red Sea, and refinery attacks in Russia unsettling traders.

The BHP Bid for Anglo-American

• BHP, the world’s largest mining company made its first bid of £31.1 billion ($39 billion) for Anglo American in April 2024, followed by two more increased offers. The proposed deal was valued at $49.2 billion (£38.6bn) in its final form. BHP’s primary interest in targeting Anglo was its copper mines. As the world becomes increasingly electrified, the demand for battery metals, especially copper, has surged. BHP sought to secure a dominant position in this market.

• A merger would have given the mining giant control of approximately 10% of global copper production, coinciding with copper prices reaching record highs—up about 23% this year according to Mining.com. BHP and Anglo American are amongst the top five copper miners globally. Combining both miners would have created a copper giant, increasing the combined firm’s copper production to 25% more than that of Freeport-McMoRan, the world’s leading producer as of 2023.

Inclement Weather

• Japan's Ishikawa Prefecture earthquakes in January disrupted steel, electronics, and construction machinery sectors

• El Niño weather patterns significantly impacted agricultural output in early 2024, causing widespread disruptions. Brazil experienced a 24% drop in rainfall between July 2023 and March 2024, further exacerbating agricultural challenges. West Africa’s cocoa regions faced severe production disruptions, highlighting the broader consequences of this climatic event on global commodity markets.

Fraud Watch

• Commodities trader Trafigura faced increased scrutiny from its lenders due to recent scandals, including a $1.1 billion problem in its Mongolian oil division and a previous $600 million nickel fraud.

• In October 2024, the CFTC charged CQC Impact Investors LLC and its executives for fraudulently reporting inflated carbon emission reductions from projects like cookstove and LED bulb installations in Africa, Asia, and Central America. Between 2019 and 2023, the company manipulated data to falsely claim higher success in reducing emissions, leading to the issuance of millions of unauthorized carbon offset credits. The SEC also took action, and criminal charges were filed against former CEO Kenneth Newcombe, COO Jason Steele, and carbon accounting head Tridip Goswami.

TOP FX <GO>

Japanese Yen Carry Trade Unwinds

• On August 5th, global equities experienced a significant sell-off with over a trillion dollars in value temporarily lost due to another episode of the unwinding of the Japanese Yen carry trade.

• By December 2024, the carry trade showed signs of revival, driven by wide interest rate gaps between Japan and other markets, lower currency market volatility, and higher government borrowing in the U.S.

The Dollar’s Darling Year

• The U.S. dollar saw its biggest annual rally since 2015, though it experienced significant volatility throughout the year. The dollar index (DXY) reached notable highs, recently surpassing 108, its highest level since November 2022. The currency rose steadily early in the year, peaking around 106.50 in May, before pulling back to near 100 in late September.

The BRICS Bridge

• The development of BRICS Bridge has reportedly reached an advanced stage in 2024, with the Russian Finance Ministry and Central Bank collaborating closely with BRICS partners on the platform.

• The 16th BRICS Summit, held in Kazan, Russia from October 22-24, 2024, was marked by several significant developments. Under Russia's rotating presidency, the summit focused on promoting a "fair world order," a theme central to the discussions throughout the event. Key strategic initiatives included the advancement of a blockchain-based payment system as an alternative to SWIFT, as well as the formation of a BRICS Economic Council aimed at fostering greater multilateral cooperation among member states.

• In addition to these initiatives, the summit saw the inclusion of 13 new partner countries into the BRICS framework. These nations—Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Vietnam, and Uzbekistan—further expanded the bloc's global reach and influence. The summit underscored BRICS' growing role in shaping global economic and political dynamics.

Tariffs Back on the Table

• In late November, the incoming Trump administration pledged to impose a 25% tariff on all imports from Mexico and Canada. Additionally, President-elect Trump, set to take office early next year, announced a further 10% tariff on Chinese goods, to be applied on top of existing trade taxes.

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TOP CB <GO>

The Global Easing Wave

• September 2024 saw unprecedented coordinated action with five major central banks cutting rates in the same month - including the Federal Reserve, European Central Bank, Bank of Canada, Swiss National Bank, and Sweden’s Riksbank.

• The Bank of Canada implemented five consecutive rate cuts since June, including two 50-basis-point reductions, bringing rates to 3.25%. This marked a significant shift as inflation returned to the 2% target.

• The European Central Bank joined the global easing trend, implementing multiple rate cuts throughout 2024. The bank lowered rates to 3.50% in September as Euro Area inflation slowed to 2.2%.

• The Bank of Japan made a historic move in March of 2024 by ending negative interest rates and abandoning its Yield Curve Control policy. The short-term policy rate was raised from -0.1% to a range of 0-0.1%, marking the first rate increase in 17 years. The BOJ also discontinued its Quantitative and Qualitative Monetary Easing (QQE) program and stopped purchasing equity-linked ETFs and J-REITs.

  • The central bank further raised rates twice in 2024 (March and July), marking its first moves away from negative rates, though maintaining relatively accommodative policy at 0.25%.

  • The Japanese economy has made a modest recovery with expected 2025 CPI hovering around 2%.

Federal Reserve’s Historic Pivot

• The Federal Reserve has implemented its third consecutive interest rate cut of 2024, reducing the federal funds rate by 0.25 percentage points in December to a target range of 4.25% to 4.5%. This marks a full percentage point of easing since September, when the Fed began its cutting cycle with a 0.5 percentage point reduction.

• Only two rate cuts are anticipated for 2025, fewer than previously expected, as GDP growth forecasts for 2024 have been revised upward to 2.5%. Meanwhile, inflation projections have increased, with PCE inflation now expected to reach 2.4% in 2024.

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