Emerging Markets Daily - April 8
Global Food Inflation Hits New Highs, Shipping Rates Remain Elevated, Air Cargo Demand Falters, EV Sales Rising Fast, Morocco-Spain Mend Ties and Open Borders
The Top 5 Stories Shaping Emerging Markets from Global Media - April 8
Global Food Prices Hit New High. Millions in Poor Countries Most Vulnerable.
Financial Times
“Global food prices have struck a new high, soaring at the fastest monthly rate in 14 years after the war in Ukraine hit the supply of grains and vegetable oils, in a shift likely to do the greatest harm in poorer countries around the world.”
“March’s food price index from the UN Food and Agriculture Organization rose to its third record high in a row, jumping 34 per cent from the same time last year, after the war shut down supply lines from Ukraine and Russia.”
“The index was 12.6 per cent higher than in February, a rise that the organisation described as a ‘giant leap’. Many poorer countries are already struggling from the impact of Covid-19, and several in the Middle East and north Africa rely on both Ukraine and Russia for their grain and vegetable oils.”
“Food inflation has helped to spur protests in a number of countries, including Sri Lanka, where the issue has created a severe economic and political crisis. ‘The ongoing conflict in Ukraine is heightening concerns about the impact on food security worldwide,’ said Beth Bechdol, deputy director-general of the FAO.”
“The World Bank has already warned that higher food prices could cause lasting damage to low- and middle-income countries and could contribute to pushing millions of people into poverty. Food costs account for 17 per cent of consumer spending in advanced economies, but a much higher proportion in developing countries.”
“…according to the FAO, nearly 50 countries depend on Russia and Ukraine for at least 30 per cent of their wheat imports. In 2021, 36 out of 55 countries with food crises depended on Ukrainian and Russian exports for more than 10 per cent of their total wheat imports, including 21 countries with a major food crisis.” The FT reports.
World Container Ship Rates Fall This Week, But Remain 64% Higher Than 2021
Drewry
“Drewry’s World Container Index composite index decreased by 1.4% to $8,041.50 per 40ft container, but is 64% higher than the same week in 2021.”
Spot freight rates by major route
Our assessment across eight major East-West trades:
“The composite index decreased by 1.4% this week, but, remains 64% higher than a year ago. The average composite index of the WCI, assessed by Drewry for year-to-date, is $9,116 per 40ft container, which is $5,908 higher than the five-year average of $3,208 per 40ft container.” Drewry’s reports.
Air Cargo Demand Falls in March, But Prices Remain High
Air Cargo News
“Air cargo volumes in March declined compared with a year earlier as the market was hit by the war in Ukraine, sanctions and lockdowns in China.”
“The latest figures from CLIVE Data Services, which is part of the Xeneta rate benchmarking platform, show that demand for March was 4.5% down compared with a year earlier – and 6.5% down on pre-Covid 2019 levels – marking a ‘sudden interruption to the recovery trend of recent months after the peak Covid disruption of the past two years’.”
“Capacity in March was down 3% compared with last year and 14% against 2019 levels. As a result, dynamic load factors – accounting for both weight and volume – stood at 66%, which is the same level as recorded in 2019 and six percentage points lower than 2021 after record levels were reached that year.”
“Despite aircraft being less full in March than they were a year ago, rates have actually increased by 27% year on year and are up by 141% compared with two years ago.”
“Niall van de Wouw, chief airfreight officer at Xeneta, said this was down to disruption on the ground.
‘There are also still many issues with capacity on the ground. One bottleneck got replaced with another one,’ said van de Wouw.” Damian Brett reports.
The World’s Electric Vehicle Fleet Will Soon Surpass 20 Million
Bloomberg
“The world is about to pass another important milestone in electric vehicle adoption: 20 million plug-in vehicles on the road globally, come June, according to BNEF estimates. That’s remarkable growth from only 1 million EVs on roads in 2016.”
“In the second half of 2022, almost a million EVs a month will be added to the global fleet, according to BNEF estimates. That’s about one every 3 seconds. Vehicles eventually get retired from the fleet due to age, wear-and-tear, crashes and battery degradation. But that’s not a big part of the EV story so far, mostly because the majority of EVs in the global fleet were sold in the past 18 months. By the end of 2022, BNEF is expecting over 26 million plug-in vehicles on the road.”
“Taking a look at the geographic breakdown of the vehicles underscores how just a few regions are driving most of the adoption. China accounts for 46% of the total sales to date, followed by Europe at 34%. North America is a distant third at 15%, but fresh policy support should get that EV market moving this year and next. All the remaining countries combined account for just 5% of the global EV fleet.” Bloomberg reports.
Morocco and Spain Re-Open Borders for Passengers and Goods
Morocco World News
“A joint declaration between Spain and Morocco stipulates that the two countries are looking forward to establishing a ‘sustainable and ambitious roadmap’ to improve their bilateral relations.”
“Morocco and Spain issued the joint declaration following a meeting between Spanish Prime Minister Pedro Sanchez and King Mohammed VI on Thursday evening. King Mohammed VI extended an invitation to Sanchez to visit Morocco after Spain officially endorsed Morocco’s position regarding the Western Sahara dispute.”
“One of the key elements in the new roadmap is the countries’ decision to fully normalize the movement of persons and goods in an orderly manner. The two countries also agreed to ensure appropriate customs and personnel control arrangements on land and sea. Passenger shipping between the two countries will also be restored immediately. The news of the reopening of borders was widely celebrated by both Spanish and Moroccan media.” Safaa Kasraoui reports.
Traveling—it leaves you speechless, then turns you into a storyteller.“ — Ibn Battuta, 14th century Moroccan traveler, scholar and writer