charge. Emerging-market premiums will shoot up by 7% in 2021, predicts Swiss Re, a
reinsurance company.
TO WATCH: CIPS v SWIFT. The tussle between China and America over Hong Kong’s
status may entangle international payments. If America tries to block China’s access to
SWIFT, China will turn to its own Cross-Border Interbank Payment System (CIPS).
Should CIPS prove cheaper than SWIFT, more of the global trading system could shift
away from the dollar.
Food and farming
Demand for food is stickier than toffee, which in the midst of a global pandemic bodes
well for farmers (if less so for consumers). The Economist Intelligence Unit’s index of
agricultural prices rose by just under 1% in 2020 and will climb a further 2% or so in
- Beverages and grains promise to be particularly resilient.
For producers, though, troubles await. A stronger dollar will suppress poorer countries’
appetite for food imports even as it encourages producers to increase output. Trade
protectionism will provide plenty of grist for worriers. Food supply chains have been
rocked by the pandemic, which has also caused labour shortages. In Britain, the shortfall
will be compounded after the Brexit transition arrangement expires at the end of 2020:
tens of thousands of EU workers normally help British farmers harvest produce.
A topsy-turvy 2021 lies in wait for commodities, including cocoa. A deal between
market heavyweights Ghana and Ivory Coast is supporting producers, but as global
prices dip by 10% in 2021, the cohesion between the two may yet crumble. The coffee
trade, too, looks frothy. Prices of sought-after arabica beans will shrivel by 6% while
those of rival robusta beans will surge by 16%; still, arabica will remain roughly twice
as expensive. Coffee retailers will have to cater to post-covid tastes. Expect a new wave
of coffee machines and home-delivery services.