From Alfa to Omicron, commodities and markets under arrest

Good morning Good afternoon Good night. We close 2021 with tones of doubt and under pandemic assault, the world continues to restrict while Covid-19 continues to mutate. 2022 will not be the same as 2020 or 2021, the money that the most powerful economies on the planet were printing will stop circulating, it will not be possible to continue loosening issuance without support, and we will surely get into more restrictive economic environments.

The governments are competing with the Private Initiative for capital, and that is not a fair game, the central banks are in practices that in the private world would be penalized with jail … it is a pyramid-style fraud and there comes a point where you cannot go more. It is clear that governments are terrible dispersers of capital, and the markets are responding to them with the worst punishment that an economy can have on top of it … inflation.

The risk of an inflationary surge that is beyond transitory or temporary leaves in the hands of the managers on duty the threat of trying to curb this surge in prices by slowing the engine of economic activity, and this may lead to stagnation and inflation. In other words, the shot could backfire and make 2022 a year contrary to the expectation that it will be a year of recovery and growth.

The Americans recently announced a reduction in the monthly issuance, in their plans it is to finish injecting liquidity by March, and then, the next move may be to gradually raise rates, that is where we will see things of interest, there are companies that are executing their business models in direct virtue of existing liquidity, there are company valuations that are forcing to put very high multiples of future sales returns and that could soon show who is swimming in the pool without a bathing suit once they remove said liquidity.

The supply chain continues to be a problem, the use of commodities in peak and restrictive threats make us doubt the cyclical capacity that markets may have to replenish inventories.

If we go into details, the Russians will shortly be putting maximum export quotas in wheat, the North American winter wheat cycle is put to the test, it is urgent to see that snow fall and protect the crop from the cold, the lack of snow left wheat exposed In the central plains to a hurricane wind event that not only carved the crop with the sand blasts that wiped out the plants, the static created left badly the wheat that needs urgent humidity and no rain is anticipated for at least the next 6 days .

South America, in contrast to the forecast, tends to be hot and dry, and that is making a dent in the production of corn and soybeans, southern Brazil is already in a zone of irreparable loss and there are fields with corn that are aborting to plant late soybeans, Brazil It will not be able to produce the expected numbers of soybeans, but it will still be record.

While the southern hemisphere remains in the hands of nature, the northern hemisphere works with current stocks and the dynamics of demand galloping at a steady pace, the consumption of protein meals, ethanol and the new fashion for renewable biodiesel that goes beyond the Conventional biodiesel technology and that in a not too distant time will be able to integrate indistinctly into an engine that will not be able to tell the difference if it is a fossil or “bio” source.

The initiative sounds fantastic, but it must be made a reality and for that matter, that is achieved with support and subsidies. President Biden’s “build back better” initiative has been put on hold, the social investment plan in infrastructure is not assured and that could reduce the ability of this idea of ​​“bio” to enter into high demand, especially if the Support programs that the industry requires are not approved. The market will have to know how to operate these differences and arbitrations, and it is not an easy task.

We are closing the second of three unparalleled years, 2020 was a fully pandemic year, 2021 a hybrid between pandemic and recovery, and let’s say it was neither one nor the other, it turned out to be a year of devaluation, 2022 should be a year of recovery, but if the effort in 2022 is only to lower inflation, perhaps we will end in stagnation for preferring to reduce inflation at the cost of growth. So maybe the full recovery period will come until 2024, maybe not.

The fact is that whatever it is, that 2022 is a year of effort and reward in proportion to this. I wish you an incredible holiday season, may the blessings multiply, and may health prevail physically and emotionally. Create a lot of happiness, share joy, grow and may the good to do multiply in abundance for the better to achieve. Happy Holidays

Cheer up

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