Commodities, Volume 3, Issue 4 (December 2024) – 7 articles

The focus of this investigation was to examine the effects of energy consumption, agricultural commerce, and productivity on CO₂ emissions in Nigeria using quantile regression. Time series data from 1960 to 2021 were used. The findings revealed that the impact of agricultural raw materials imports (AGRIMs) and exports on carbon footprints is positive. There is a prevalence of a set of notable percentile differences in the conditional distribution of the variables on CO₂ emissions. Initially, the coefficient of energy consumption (EnCons) was high, but constantly nosedived from the 25th quantile until it reached the 90th quantile when it picked up again, and the same was true in the case of AGRIM. Thus, a 1% increase in agricultural imports will bring about 0.0047—a significant unit increase in CO₂ emissions in Nigeria from the 0.382946 coefficient in the 10th quantile to the 0.264392 coefficient in the 50th quantile, and thereafter, the effects become insignificant. Profound significant variance across disparate percentiles in the conditional spread of AGRIM, food production index (FPI), CPI, and FDI was found. It further showed that the effects of the regressors on carbon emissions differ over the quantiles. Overall, AGRIM and EnCons have positive and significant effects on carbon emission. However, the agricultural raw material export has significant negative effects on CO₂ emissions as the movement (transportation) of goods within a country prior to export involves a huge level of carbon release. This study provides recommendations and policy implications. Full article

Brazil is a resource-rich economy that relies heavily on the exports of several important commodities. The variability of commodity prices affects both the economy and the stock market. This study investigates the relationship between commodity price shocks and stock returns in Brazil using a structural vector autoregressive (SVAR) model. This study uses monthly data on prices of five major export commodities, stock returns, and several control variables, covering the period from January 2010 to December 2022. To account for the Brazilian economic crisis between 2014 and 2016, we have analyzed the effects of commodity prices on stock prices in three different time periods, namely, before the economic crisis (January 2010–March 2014), during the economic crisis (April 2014–December 2016), and after the economic crisis (January 2017–December 2022). The empirical results of this study provide evidence to conclude that stock returns increase following a positive global commodity price shock or a positive exchange rate shock. The effects are more noticeable during the economic crisis in Brazil. The results also show that the volatility of Brazilian stock returns is mostly explained by global oil prices and exchange rate movements in the long run. Full article

We examine how LNG carrier port congestion in European ports, measured via detailed vessel-level AIS data, affects euro area energy inflation. As energy inflation significantly affects headline inflation, this study provides an additional factor that can contribute to inflationary pressures. Overall, the results show that higher port congestion increases natural gas prices with the latter having an impact on energy inflation. The reaction stands at 0.1% per 1% shock in port congestion. These findings underline the relationship between the shipping industry and the real economy and support the view that shipping developments can potentially be used as leading indicators. Full article

The cryptocurrency market is characterized by extreme volatility, with events such as the Terra-LUNA crash of 2022 raising significant questions about the resilience of algorithmic stablecoins. This paper investigates the collapse of LUNA Classic during the USTC depeg, focusing on the role of trading volumes and collateral assets like Bitcoin in amplifying the price crash. Using a Vector Logistic Smooth Transition AutoRegressive (VLSTAR) model, we analyze daily data from October 2020 to November 2022 to uncover how exogenous volumes influenced LUNA’s price trajectory during the crisis. Our findings reveal that high trading volumes, particularly during regime two (the post-depeg period), significantly exacerbated the price decline, validating the impact of large-scale liquidations on LUNA’s price path. Additionally, Bitcoin volumes played a critical role in destabilizing the system, confirming that the liquidity of underlying collateral assets is pivotal in maintaining price stability. These insights contribute to understanding the systemic vulnerabilities in algorithmic stablecoins and offer implications for future stablecoin design and risk management strategies. They are relevant for investors, policymakers, and researchers seeking to be aware of market volatility and prevent future crises in stablecoin ecosystems. Full article

Property Assessed Clean Energy (PACE) programs finance energy efficiency and renewable energy improvements to residential and commercial properties with a special tax assessment added to property taxes. This paper surveys the literature and documents the quantitative estimates of the environmental and economic benefits. This paper extends to discuss the securitization of PACE loans. The issuance of PACE green bonds frees up capacity for more PACE improvements. In addition, we summarize the concerns raised after the programs have been implemented. Those concerns include consumer protection, audit after program implementation, and lien-related risks for lenders. We discuss those concerns and suggest measures to continue to grow PACE financing. The success of PACE programs will contribute to reducing carbon emissions, mitigating climate change and to achieving six of the seventeen United Nations Sustainable Development Goals (SDGs). Full article

This research paper examines the risks posed by the MIH EV Open platform to German automotive suppliers, in particular, the risk of commoditization and falling into a commodity trap. The term commodity trap describes a situation in which companies dealing with standardized products or services face intense price and margin pressure and struggle to differentiate themselves from competitors. The MIH EV Open platform, established by Foxconn, also known as Hon Hai Precision Industry Co. Ltd., headquartered in Tucheng, Taipei, Taiwan, aims to create a collaborative platform for the comprehensive development of key software, hardware components, and services in the electric vehicle (EV) industry. It unites over 2700 companies from more than 70 countries and fosters collaboration to accelerate the development and market entry of new EV products. This paper analyzes the MIH EV Open business ecosystem model and assesses the strengths and weaknesses of German suppliers in addressing these challenges. This study highlights strategic approaches, including innovation, portfolio adaptation, customer relationships, and sustainability practices, that can enable German suppliers to mitigate commodity trap risks. The findings underscore the importance of proactive, segment-specific strategies amidst the transformation of the automotive industry. Key insights are provided on the potential impact of open platform ecosystems and recommendations for German automotive suppliers to maintain competitiveness. This research fills a gap in the literature by examining the commoditization risks posed by the MIH EV Open platform for German automotive suppliers. Unlike previous studies that focus on traditional market structures, this study explores the novel dynamics introduced by platform ecosystems and provides strategic insights to mitigate these risks. Full article