Most Recent Audio: 05 May 2021

David Fuller and Eoin Treacy's Free (Abbreviated)
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May 05 2021

Commentary by Eoin Treacy

Video commentary for May 5th 2021

May 05 2021

Commentary by Eoin Treacy

Gold CEO Blasts 'Hysterical' Fund Managers Chasing Quick Cash

This article by James Attwood for Bloomberg may be of interest to subscribers. Here is a section:

“I’m cautioning people not to become too obsessed with stripping the industry out of its cash, and not allowing strengthened balanced sheets to be built and investments in the future,” he said. “Whether it’s exploration or deal making, it’s got to create value and you can’t create value as a mining executive if you don’t have support from the fund managers.”

Eoin Treacy's view

Investors have been conditioned to expect well-capitalised companies will buy back shares, pay special dividends and will not engage with capital intensive business lines. That sounds great for tech companies but it doesn’t work for miners. Mining executives that are not actively engaging with M&A targets are coming under profound pressure to distribute available cash. Meanwhile there is no tolerance for green field exploration among either large miners or investors. No one wants that kind of open-ended risk. The 10-month correction in the gold price will only have further damaged appetite for investment in new supply and particularly from banks which control the supply of liquidity. At a minimum it will require even better prospects than normal. That bolsters the limited supply argument over the medium term.

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May 05 2021

Commentary by Eoin Treacy

Colombia Coffee Exports Halted by Protests, Federation Says

This note may be of interest to subscribers. Here is a section:  

Coffee isn’t moving to ports, including the main Buenaventura shipping hub, because of nationwide protests and road blockades, Roberto Velez, CEO at the Colombian Federation of Coffee Growers says by phone from Bogota.

The Colombian situation is fueling gains for prices in New York, which have reached the highest since 2017
Protests that started last week against a tax reform bill continued even after it was withdrawn, Velez says, adding any solution would have to come from the central government
There’s also concern that Covid-19 rates are increasing in coffee areas
Coffee pickers needed for the harvest are already on the farms
NOTE: Colombia Protests Slow Coffee Shipments to Ports, Importer Says
2021 Coffee Output Seen at 14M Bags: Trade Group

Eoin Treacy's view

The Brazilian drought has been the primary tailwind for coffee prices over the last few months. A threat to the consistency of Colombian exports represents and additional tailwind for as long as it lasts. Coffee is one more commodity experiencing supply inelasticity. The year of lockdowns unset supply/demand fundamentals and left the commodity markets more susceptible to weather or political interruptions. The result is rising prices for just about everything.

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May 05 2021

Commentary by Eoin Treacy

Chinese vaccines sweep much of the world, despite concerns

This article from the Associated Press may be of interest to subscribers. Here is a section:

China’s vaccine diplomacy campaign has been a surprising success: It has pledged roughly half a billion doses of its vaccines to more than 45 countries, according to a country-by-country tally by The Associated Press. With just four of China’s many vaccine makers claiming they are able to produce at least 2.6 billion doses this year, a large part of the world’s population will end up inoculated not with the fancy Western vaccines boasting headline-grabbing efficacy rates, but with China’s humble, traditionally made shots.

Amid a dearth of public data on China’s vaccines, hesitations over their efficacy and safety are still pervasive in the countries depending on them, along with concerns about what China might want in return for deliveries. Nonetheless, inoculations with Chinese vaccines already have begun in more than 25 countries, and the Chinese shots have been delivered to another 11, according to the AP tally, based on independent reporting in those countries along with government and company announcements.

Eoin Treacy's view

This map of China’s vaccine exports is very impressive and highlights just how high global demand for any form of vaccine is. China’s commitment to export hundreds of millions of doses before inoculating its domestic population and the spotty efficacy data for its shots suggests there is more at work than meets the eye. 

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May 05 2021

Commentary by Eoin Treacy