Good morning.

Here are the key metrics for Wednesday, January 4, 2023. Sorry I had to skip yesterday but the data were a bit thin as they are today. Look out for Friday's update when we'll have a bit more to work with.

(Not sure of how to use these metrics in your risk analysis? Read the white paper here  and look out for a detailed user’s guide coming in the early New Year.)

Relative Values (90-Days)

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Trends (21-days)

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Commentary and Evaluation

Brent Crude

Brent Crude is mid-range for this 90-day interval having increased moderately over the last 21 days from its previously lower rates.

What to Watch

Russia’s announcement of retaliatory measures against the EU’s price cap in late December were “largely symbolic” but leaves room for future action. The announced measures prevent the sale of Russian crude to countries applying contract thresholds but these sales have largely stopped already making the announcement largely symbolic. However, the statement by Putin did leave room for future measures but the immediate danger of a price hike due to Russian actions has receded.

Market analysts predict 2023 prices will peak around $95 with an average of around $90, a drop from previous 2023 estimates which reflects a gloomy outlook for the year. 

See Reuters for more

Iron and Steel

Iron and Steel remain very high for this 90-day interval and prices were relatively stable over the last 21 days

What to watch

The Chinese construction and manufacturing boom that many expected in 2023 is off to a very unsteady start as COVID spreads rapidly after December’s relaxations. Sectors that had struggled under the strict COVID restrictions are suffering just as much in the current laissez-faire environment. This will delay the expected economic boom into mid- to late-2023 and it seems that the Chinese economy will continue to suffer through Q1 and into Q2, postponing with associated pressure on steel, iron, oil and shipping.

See The FT for more

Market Volatility (VIX-US)

Market Volatility (VIX-US) is very low for this 90-day interval, decreasing moderately over the last 21 days but with large swings over that period in the run-up to the end of the year.

What to Watch

The range of conditions facing markets and investors remains significant and complex, meaning that it’s unclear what will help ease tensions and reduce volatility. The turbulence in the US Congress as the GOP struggles to elect a speaker will add to the uncertainty that many will be feeling. The hangover from the end of the year hasn’t worn off yet.

See the NYT for more 

Wheat

Wheat is high for this 90-day interval after prices increased moderately over the last 21 days

What to Watch

Despite agreements brokered by Turkey, Russia could still impose a complete blockade on Ukrainian grain exports to exert pressure on Kiev and her allies. Meanwhile, even strict controls and inspections for outbound shipments mean that exports remain slowed. Moscow could also conduct military operations to disrupt spring planting meaning that prices could rise again next spring and summer.

Read more in AGWeek.

Ocean Freight (FBX)

Ocean Freight (FBX) is very low for this 90-day interval. Prices were relatively stable over the last 21 days although the small uptick prior to the end of the year remains.

What to watch

China’s reopening and the effects of recessions on demand in the US and elsewhere remain the biggest issues to watch but there are no clear, specific signs to track at the moment.

Up-to-date shipping data supplied by our partner Freightos

Random Stat

$45,837, $16,613, 37%

Bitcoin ended 2022 down 63% at $16,836, a $29,000 drop in the year. Plans for the moon are currently on hold.

That's it for today. I'll be back shortly with the users guide and the report on what I'll be watching in 2023.