The war in Iran, now in its second week, is having a devastating effect on all markets. The spread of the conflict and the appointment of Mojtaba Khamenei to replace his slain father has convinced markets that the war will be long and drawn out due to a lack of ground troops. The blockade of the Strait of Hormuz has caused:
- A sharp rise in oil and gas prices, which will greatly hamper deliveries to the Indian subcontinent and China.
- A surge in all oil derivatives, particularly nitrogen fertilizers, with serious repercussions for India in particular.
- Serious instability in maritime transport as a whole, which is likely to quickly bring global trade to a standstill.
- ... to name but a few of the main repercussions of this war with its blurred contours and uncertain objectives, which for the moment is only benefiting Russia.
Indeed, the rise in crude oil prices will enable it to replenish its coffers all the more quickly as some of the sanctions are lifted to allow India to resupply itself from Russian operators for at least a month. Similarly, the huge fertilizer-producing conglomerates can rub their hands with glee...
But two new commodities are emerging as targets in this war: water, with desalination plants under attack on both sides, and data. By attacking key data processing centers in the Gulf, Iran intends to permanently destabilize data traffic on all continents.
All it took was a slight improvement in the outlook for cotton for a correction to occur and prices to fall again. However, we remain reasonably optimistic because:
- Cotton purchases are continuing, even though US sales have slowed according to this week's USDA report.
- The March WASDE report should confirm the balance between supply and demand and, no doubt, a slowdown in Chinese production.
- Planted areas are expected to decline in many regions, including the US, Brazil, India, and probably China.
- The war will cause a further increase in cost prices for the new harvest, regardless of where it is produced.
In the current confusion, no one can say whether the meeting scheduled for the end of the month (but not confirmed by the Chinese authorities) between Donald Trump and Xi Jinping will actually take place. No one knows how long American public opinion will accept seeing a carpet of bombs rained down far from its shores, whether it will be moved by seeing its boys miss other targets and kill little girls, or whether it will "enthusiastically" join the Secretary of Defense in celebrating the destruction of an unarmed Iranian warship off the coast of Sri Lanka.
Freedom and democracy come at a price, but we must be sure that these are indeed the objectives being pursued.
Πηγή: Mambo