Commodity Tracker: 5 charts to watch this week

1. Bitcoin mining energy consumption rises

What's happening? Bitcoin global energy consumption reverted in early December, on a course to the all-time high of 1,230 MWh per bitcoin, according to S&P Global Commodity Insights Bitcoin Energy Consumption Index data. This rise highlights the intense energy demands of the cryptocurrency mining sector.

What's next? Volatility in power prices affects the profitability of bitcoin mining. This happens despite rising energy consumption and bitcoin prices hitting a new all-time high.

2. Australian wheat prices volatile after adverse weather during harvest

What's happening? Untimely rainfall during the second half of November has created volatility in Australian wheat prices amid fears of harvest delays as well as crop quality damages. This is in spite of widespread consensus of a larger wheat production at close to 31 million mt in the 2024/25 marketing year (October to September) compared to last season.

What's next? Growers in Australia will be rushing to ramp up the harvest pace following an improvement in the weather in early December. However, many market participants have cautioned that quality damage could be serious, particularly in cropping regions on the East Coast. Quality damage is expected to affect test weight and falling numbers, which could downgrade high or mid-protein milling wheat into feed grades.

3. US ULSD production reaches a five-year high

What's happening? US ultra-low sulfur diesel production reached its highest level of 5.15 million b/d since 2019, the latest Energy Information Administration weekly data showed. Diesel cracks have been strong in recent weeks, leading refiners to focus on diesel production and away from jet and kerosene.

What's next? Market participants expect this trend to continue through the winter as diesel prices remain steady amid average demand and plentiful export opportunities open to Europe and Latin America. Jet production will likely remain limited during the travel offseason.

4. Increased diesel availability pressures prices in Brazil's main ports

What's happening? Higher diesel availability in Brazil due to increased imports, boosted domestic refinery outputs, and a seasonal drop in harvest demand has led to a decrease in FCA prices in the fourth quarter. The current diesel FCA outright at the Santos port (Real 3,502.60/cu m, Dec.2) is Real 70/cu m lower than the price at the beginning of October, according to market participants. Heated domestic harvest demand, which is now slowing down, influenced a significant boost in diesel output in Brazil's refineries in October.

What's next? Brazilian diesel imports are expected to increase by 13% in 2024 compared with 2023, according to S&P Global Commodities at Sea data. But importers have started to reduce purchases in the past few months. An oversupply in the Atlantic Basin market could make domestic diesel prices less competitive in Brazil in the short-term, as the local market does not follow import parity prices, according to S&P Global's analytics team.

5. Southern Star plans expansion to meet growing gas demand

What's happening? Southern Star Central Gas Pipeline is seeking US Federal Energy Regulatory Commission authorization to boost capacity, through compression, to meet rising natural gas demand in Missouri and Kansas. Southern Star plans the expansion "in response to the requests and concerns of its shippers due in large part to recent winter storms." Shippers are concerned about significant spot price spikes during each of these. The Southern Star Texas-Oklahoma-Kansas gas spot price reached almost $29/MMBtu for Jan. 13-16 flows during the winter storm earlier in 2024, according to Platts assessments. And during a 2021 storm, the price soared as high as $623/MMBtu.

What's next? Southern Star's planned Cedar Vale Compressor Station Project involves building a new 6,091-horsepower compressor station in Osage County, Oklahoma, according to FERC. It would add about 98,000 Dt/d of firm capacity in Southern Star's market delivery area, and about 35,000 Dt/d in incremental firm capacity in its production area. Southern Star has secured agreements for a significant portion of the new capacity and is conducting open seasons for the remaining capacity until Jan. 31, 2025.

Reporting and analysis by Maxim Grama, Vivien Tang, Edward Low, Aaron Tucker, Isabela Rocha, Kauanna Navarro and Killian Stains