Commodity management 2020 – the rise of the digital platform

2019 was a turbulent year for commodities, driven by trade wars, tariffs, supply chain disruptions (including OPEC’s export cuts) and higher geopolitical risk. Many analysts predict that slowing global economic growth and the continued US-China trade war will drive prices lower in 2020, while others are more optimistic. One thing is clear, uncertainty and volatility will remain.

Geopolitical challenges will continue to drive volatility in 2020.

• Brexit is back on track, with the UK poised to leave the EU in 2020. Johnson wants to rule out any extension of the Brexit process, and he has the power to proceed with any deal now.
• Phase one of the US-China trade deal should be ready to sign at the beginning of January, possibly improving trade between the two nations; however, growing techno-nationalism on both sides is driving a new global economic dynamic.
• The US is facing a presidential election. A Trump victory would set the US up for four more years of aggressive trade policies, while a narrow Trump loss could cause domestic political turmoil.
• The World Trade Organization is becoming less relevant as preferential trade arrangements, bilateral and multilateral, become more common.
• The potential for a global economic slowdown threatens all commodity markets. World trade growth more than halved since 2018, depressing global growth to its lowest level since the great financial crisis.

Geopolitical factors are not the only things driving commodity market volatility. Changing government regulations, shifting consumer preferences, and evolving technology all impact commodity markets. Energy prices used to be determined by OPEC+, but today the US is an energy exporter, shifting the power balance. At the same time, consumer preferences and government regulations are fuelling demand for renewable energy and lower carbon-intensive fuels like natural gas and LNG, while coal has fallen out of favor.

Agriculture trading is evolving rapidly, as consumers push for certified organic food and demand traceability from farm to fork; farmers invest in technology to improve yields, negotiate directly with buyers, and conserve resources; and governments push to improve the livelihood of farmers in developing nations. New seed technology, intelligent forecasting models, and farmer networks have shifted power away from buyers to farmers.

At the end of the day, the one certainty in commodity markets is that speed is essential. Markets are moving fast – whether fuelled by politics, climate change, or disruptive technology – and commodity-intensive companies must be prepared to react quickly and effectively.

The platform approach to commodity management ties all data and systems together – end-to-end across the value chain – on one, central platform. By enabling real-time access to all data across the entire value chain, the platform enables fast, effective analyses and reporting. Financial management, supply chain management, and trading and risk are all linked, ensuring every decision is based on the latest, most accurate information from across the entire organization.

The power of one platform is the power of speed, agility, connection and collaboration – for all commodities and all commodity-intensive companies. With a single, cloud-native platform, companies power their entire value chain to move faster, make smarter decisions, and tame volatility.

Gain the speed and agility to succeed in today’s fast moving and uncertain markets. The platform links isolated systems, providing businesses a single view of their data and the ability to convert it into actionable insights for better decisions. Every analysis drawing on a single version of truth ensures consistency, improves collaboration, and enables faster decision making.

Modernize infrastructure and digitally transform business with seamless collaboration, workflow and integrated data between the front, middle and back office.

A cloud-native platform is extensible, with a modular architecture that enables rapid application development for expanding functionality and open APIs to allow fast integration with other applications and data sources for exceptional speed and innovation.

Use robust analytics – powered by AI and machine learning – to gain deep market insight and make more informed decisions. Connected data means better visibility. Use advanced analytics to find more opportunities and mitigate risk more effectively.

An end-to-end platform enables operational efficiency by digitally connecting all trading partners – counterparties, partners and suppliers – to enhance collaboration, streamline and automate manual processes and eliminate errors.

Today, commodity businesses face increased price volatility, cost pressures and competition, and compressed margins. According to an Ernst & Young report, recent technological advances offer the potential to tackle these new challenges. Sophisticated, platform-driven solutions that connect systems, data and people help businesses stay ahead in volatile markets. Such systems help maximize the value of data, automate critical workflows, minimize supply chain disruptions and enable better and more informed decisions.

With Eka’s Platform, businesses can choose from over 50 enterprise apps embedded with years of deep domain commodity knowledge – or they can build their own apps with minimal or no coding. Built to serve entire commodity value chains – from sourcing and trading and risk management, to supply chain operations and downstream, across agriculture, energy, metals, mining, CPG and manufacturing markets – the apps can be independently deployed and connected across multiple asset classes for enhanced flexibility and scalability.

Learn more about Eka’s platform.