David Fuller's view Price charts provide early insights and keep you in touch with relative performance and changing trends around the world.

The important South American soybean and corn crops have been planted and are beginning to develop towards yearend. 1Q 2013 will obviously be crucial for these crops but the planting season appears to have been generally favourable as are early indications for crop development to date.


This is reflected by a downward drift in US soybean (historic monthly & 5-year weekly) and corn (historic & weekly) prices, albeit from previously high levels. Therefore, successful harvests for both the South & North American crops in 2013 remain necessary to lower food price inflation from grain and bean staples, as you can see from this century's overall upward trends, which have also been exacerbated by the falling purchasing power of the USD and other fiat currencies. This latter point cannot be overemphasised.

Wheat (historic & weekly) and rough rice (historic & weekly) have broadly similar patterns, although many developing and also poorer nations have been spared additional upward price pressure for rice, which has not approached its 2008 accelerated peak in recent years.


Crude oil (WTI and Brent) remains the world's most important commodity, with the potential to underpin an economic recovery from lower levels or to bring global GDP growth to a screeching halt, as we last saw in 2008. Brent is closer to the price that most of the world's oil importers have to pay and it has been rangebound for most of the last two years. The stability helps but I still regard Brent at just over $110 as a modest headwind for the global economy. Should it take out the upper side of the range near $128 for any reason, I think global GDP growth would suffer, particularly among poorer countries. The chart of WTI is currently at $91, demonstrating the USA's big advantage among developed economies in terms of energy prices, thanks to fracking. The upper boundary for the last 20 months is near $115 and a break in the lower rally highs would be required to signal the risk of higher oil prices.

The USA's energy advantage is also underlined by natural gas prices (NG1 versus FN1) - the USD contract in MMBtu and the GBP contract in therms. The price spread has narrowed as the US contract has risen but Eoin estimates that the UK and rest of the natural gas importing world are currently paying a premium of approximately 3 to 1 for this valuable fossil fuel. The UK has a liberalised market for NG but it could be even higher in Europe where long-term contracts tied to European oil prices are the norm.

The bottom line on global energy supplies is that they are still tight, although no where near the extent that many pundits were forecasting throughout the previous decade or two. The last big energy spike in 2008 certainly contributed to the global economic slowdown, reducing demand for energy in the process.

However the big change, predicted by Fullermoney for several years, is due to technological innovation. The industrialised world has continued to develop more energy-efficient engines. The insulation of buildings in colder climates has improved. Heavily subsidised forms of renewable energy continue to be developed and are becoming more efficient. This is particularly true of solar power in hot, sunny regions of the globe. The Fukushima nuclear accident in 2011 probably set the industry back by a decade. Nevertheless it has continued to develop smaller and most importantly, considerably safer nuclear plants for the future.

Lastly, the biggest and most important technological breakthrough for energy in Fullermoney's view has been fracking, developed in the USA and now capable of tapping vast global reserves of shale gas and oil. So far, only the USA has really utilised this technological advance, despite indifference and even some opposition from the Obama administration. There is a lesson in this because our cheapest and most plentiful source of energy for the future has been developed entirely by private enterprise in the USA, and utilised only on its private lands.

China has bought fracking know how and it has vast reserves of shale oil and gas. Very little has been produced to date but this will soon change. The UK is now beginning to develop its shale properties, following the highly controversial, inefficient and costly experiments with wind farms. Most countries have shale reserves and we can expect many of them to be developed over the next 30 years. This will make a considerable contribution to lower energy costs, at least in real (inflation adjusted) terms, and possibly before the next decade, subject to political views on fracking within individual countries. The extraction industries are always controversial and shale gas and oil are not 'green' industries, although natural gas burns more cleanly than other fossil fuels.

China's stock market and economic recovery in 2013 should be one of the most important stories, if not the key influence on several other global trends. Eoin and I have discussed this on a number of occasions in recent weeks because we regard it as so important. I will resume my coverage next week.