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The South Korean fired warning shots Tuesday at an “unidentified object” flying across the heavily fortified border from North Korea Tuesday afternoon according to the Joint Chiefs of Staff. The military detected the object traversing the Military Demarcation Line (MDL) southward in the Chorwon area in the eastern province of Gangwon at around 4 pm.

South Korean army’s K-55 self-propelled howitzers fire during the annual
exercise in Paju, near the border with North Korea on Monday, May 22.

According to Yonhap News, a defense source said the military fired more than 90 K-3 machine gun rounds, adding it may have been a drone. The South’s military is analyzing the object and its route and has beefed up its air defense posture, said the JCS. The incident added to already-high tensions between the Koreas following the North’s continued ballistic missile launches.

In January last year, a North Korean drone flew over the MDL into the western section of the demilitarized zone. The South opened machine gun fire on it.

South Korea’s Joint Chiefs of Staff said in a statement that the South Korean military bolstered its air surveillance and broadcast a warning to North Korea in response to the object. It provided no other details.

The Koreas face off across the world’s most heavily armed border, and the two sides occasionally clash. In 2014, they traded machine gun and rifle fire after South Korean activists released anti-North Korean propaganda balloons across the Demilitarized Zone that bisects the Korean Peninsula, but no casualties were reported. Attacks blamed on North Korea in 2010 killed 50 South Koreans.

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UK Prime Minister Theresa May addresses the nation after the worst terrorist attack in the UK since 2005.

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Authored by Mike Shedlock via MishTalk.com,

Last year, the socialist party (PSOE) leadership ousted Pedro Sánchez as its head when Sánchez refused to allow a minority government of Mariano Rajoy to form. Susana Díaz took over as party head.

Socialist party elections were held yesterday. Sánchez ran again as an outsider and shocked the POSE leadership winning an outright majority of votes in a three-way race. This was a clear smack in the face to the party leadership who backed Susana Díaz.

With Sánchez back at the helm in Parliament, Rajoy has little chance of getting his legislation passed. Rajoy now has his eye on calling snap elections.

The Guardian reports Spanish Socialists Re-Elect Pedro Sánchez to Lead Party.

Pedro Sánchez has regained the leadership of Spain’s bitterly divided socialist party seven months after being ousted in a coup that laid bare the faultlines within the PSOE and left its status as the main opposition party in jeopardy.

 

On Sunday night, Sánchez took 50% of the vote, sailing past his main rival, Susana Díaz, the president of the PSOE stronghold of Andalusia, who took 40%. The former Basque president Patxi López finished third with 10%.

 

The PSOE has been in the hands of a caretaker administration since October, when Sánchez stepped down after powerful factions within the party rebelled against his refusal to allow Mariano Rajoy’s conservative People’s party (PP) to form a government.

 

Following his resignation, the PSOE abstained from Rajoy’s investiture debate, returning the PP to office and ending the 10-month political stalemate that had left Spain without a government after two inconclusive general elections.

 

Díaz, who was backed by party heavyweights including former PSOE prime ministers Felipe Gónzalez and José Luis Zapatero, had called for a more pragmatic approach to dealing with the PP.

Snap Elections

Eurointelligence fills in the remaining pieces of the story with commentary on snap elections.

The party will now hold its congress over the weekend of June 18 to renew its executive committee and approve its political platform. The danger for the PSOE is that the party may emerge from the congress divided, or that MPs and regional premiers will actively undermine Sánchez’ leadership.

 

Sánchez, who was never particularly to the left of the PSOE, rode a wave of members’ discontent about the party’s decision to abstain last October to allow Rajoy to form a government, thus avoiding a third round of elections which would have fallen on Christmas Day. Rajoy has indicated that, if the 2017 budget does not pass the parliament next month, he would call early elections.

Spain is likely headed for a third presidential election, but it’s unclear if the results will be any different than the previous two elections that resulted in blocked governments with no party being able to form a coalition.

The problem with dissolving parliament now is the crisis in Catalonia. The region has threatened to declare independence immediately if the Spanish government does not allow a referendum.

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Tensions stemming from last week’s massive brawl, caught on video, between pro-Kurdish protesters and Turkish President Recep Erdogan’s security detail, escalated on Monday after, paradoxically, Turkey lodged a formal complaint with John Bass, the U.S. ambassador in Ankara, over purportedly “aggressive” actions taken by American security personnel. The complaint accused U.S. law enforcement of failing to quell an “unpermitted” and “provocative” demonstration, and demanded a “full investigation of this diplomatic incident,” according to WaPo. It failed to mention that Erdogan’s entourage was more than fully equipped to deal with this “demonstration”, by attacking and beating random protesters, sending a dozen of them in the hospital.

Reuters added that the Turkish government summoned the U.S. ambassador on Monday to discuss the treatment of Erdogan’s bodyguards following Tuesday’s incident outside the Turkish ambassador’s residence in the Washington, D.C. suburbs. It appears that in the span of just five days, the two sides developed drastically different accounts of what happened, with U.S. police accusing Erdogan’s bodyguards of viciously attacking the allegedly peaceful protesters. The State Department called the conduct of Erdogan’s body guards “deeply disturbing” and has “raised concerns about those events at the highest levels,” according to a spokeswoman who spoke with WaPo.

Meanwhile, the Turkish Embassy said last week that Erdogan’s bodyguards had acted in self-defense, and that the protesters were affiliated with the Kurdish terrorist group PKK. Some of the protesters were waving the flag of the YPG, the Kurdish militia organization, that the U.S. recently pledged to arm and which Turkey accuses of being terrorist.

The exact nature of the “mistreatment” to which Turkey is objecting remains unclear. Two people were arrested during the brawl, which Reuters is now reporting left 11 people injured, including a Washington police officer. It’s been confirmed that one of those arrested was a protester. However, it’s unclear if the second was a member of Erdogan’s entourage.

Since the incident, nothing but outrage has been building up at both the State Department and Capitol Hill. John McCain angrily (of course) accused Erdogan’s entourage of disrespecting their hosts, fuming to the press that the U.S. isn’t “a third world country” and that the Turkish ambassador should “get the hell out” of the U.S. And at least one Democratic Congressman asked President Donald Trump to officially expel the foreign minister.

Footage of what the Washington police chief described as “a vicious attack” shows security guards dressed in suits viciously kicking and punching protesters. In one particularly grisly scene, a security official repeatedly kicks an injured protester in the face.

The brawl occurred just hours after Erdogan and Trump had wrapped up a historic meeting at the White House where both Trump and the Turkish leader, fresh from his power-enhancing referendum victory, smiled during a press conference and pledged to renew frayed relations between the two countries.  Erdogan arrived in Washington with misgivings about the U.S.’s decision to arm the YPG, as well as the Trump administration’s refusal to hand over Fetullah Gulen, a cleric living in self-imposed exile in Pennsylvania. Erdogan has accused Gulen, a former ally, or orchestrating the July coup attempt that left more than 200 Turks dead.

While it remains unclear what triggered the melee, it no longer appears relevant: the ensuing diplomatic fallout has overshadowed talks that both Turkey and the U.S. had described as constructive.

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Submitted by James Durso, originaly posted op-ed via The Hill,

Otto von Bismarck said, “The whole of the Balkans is not worth the bones of a single Pomeranian grenadier.” America should apply the same reasoning to Afghanistan.

This month we learned the U.S. Marines are back in Helmand, Afghanistan’s most violent province and the center of opium poppy production, and their mission may expand. President Trump will soon decide if he should send 8,400 more troops there for the latest chapter in America’s longest war. Should he?

I think not. We gave Afghanistan out best effort: over 2,200 dead soldiers, over 20,000 wounded, and over $700 billion for everything from ammunition to medical care for veterans. We need to face the fact that it’s an endemically violent place and may never change and another “whole of government” effort may not make any difference.

And don’t take my word for it: the Talban has rejected peace talks with the Afghan government as surrendering to the enemy and against Islam.

The Afghans have seen off every visitor and invader, from Alexander the Great to the U.S. Central Command, so why spend another dollar there? For example, the regional transport network has avoided Afghanistan and the enthusiasts for a New Silk Road or One Belt, One Road haven’t absorbed that the world is avoiding Afghanistan not out of stupidity but out of hard-won experience.

Yes, there is wealth to be had: Russian, British, and American geologists have found that Afghanistan has enormous untapped mineral resources, valued at $1 to $3 trillion. The minerals are in the ground, sure, but there’s no way to get them out so they’re effectively worth nothing. And there’s no way to get them out because the country is violent and corrupt which scares away prudent investors.

In 2008, the Chinese won the rights to the Aynak copper mine for $3 billion and an alleged $30 million bribe to the minister of mines. In 2017, no copper has yet been mined and the Chinese executive heading the project has been expelled from the Communist party for corruption. The only good news, if you can call it that, has been the recent Taliban green light for the restart of the project.

Wise Western investors should temporarily cede the field to the Chinese, Pakistanis, and Iranians — our enemies and frenemies — and let them try to make something of it. Afghanistan will still want friends in the West and we should exercise some of that recently derided “strategic patience” until the time is right and the Chinese have worn out their welcome when the Afghans realize they won’t create any jobs. Dealing with Afghanistan should be like buying a used car — let someone else take the loss and get it later at a savings. In this case, the savings of American lives and the bandwidth our leaders can devote to tractable issues.  

What should the U.S. do? 

• Ensure the Afghans who helped our military and diplomatic effort as translators or other helpers get visas to the U.S. Yes, that will cause a brain drain, but as it stands now, they’re not being given the chance — by their own government or the Taliban — to do what they’re capable of, so their talent is being wasted. It won’t be wasted in the U.S.

• Enact a soft cordon to protect the neighboring Central Asian states. They have less transparency than we like but have functioning governments and moderate, secular societies. The U.S. should increase military-to-military and cop-to-cop relationships with Central Asia, both for security sector reform and border security to stanch the flow of drugs. If the effort works, and the flow is diverted via Pakistan and Iran, it will increase addiction and public corruption and give the U.S. another lever to use when dealing with Tehran and Islamabad. Central Asia has a lot of human potential, mineral and energy resources, and is an East-West transport route. The transporters will lose a north-south route to the Indian Ocean and the Arabian Sea via Afghanistan and Pakistan, but the Central Asian states can continue to trade to the Persian Gulf via Iran.

• Focus our effort on the narcotics trade and its twin, money laundering. Afghanistan has one successful export: poppy, which accounts for 90 percent of worldwide production of heroin, and the area under cultivation has increased in fits and starts since 2002. Destinations for drug proceeds and stolen government funds, like the United Arab Emirates, are more interested in being word-class business centers than hosting crash pads for narcos, so we can count on their continued cooperation and assistance. U.S. assistance to Afghanistan’s counter-narcotics effort, which will be centered in Helmand Province — the destination for all those Marines — can be refashioned to technical intelligence support to supplement HUMINT networks. 

We did our best in Afghanistan, but it’s time to move on.

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As highlighted in today's UNICEF report 'A Child is a Child', the number of young children applying for asylum in Europe has continued to rise, reaching a new peak last year.

You will find more statistics at Statista

As Statista's Martin Armstrong notes, according to figures from Eurostat, there were almost 290,000 first time applicants in 2016 that were under the age of 14.  Of all child asylum seekers in Europe, 170,000 were not accompanied by an adult in 2015-2016. In fact, 92 percent of all minors arriving in Italy by sea in 2016 and the first months of 2017 were unaccompanied. Globally, children account for around 28 percent of all trafficking victims.

We are unsure how many of these children were in attendance at last night's Ariana Grande concert suicide bombing…

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Authored by Federico Pieraccini via The Stratgic Culture Foundation,

Once in a while, think tanks such as the Brookings Institute are able to deal with highly strategic and current issues. Often, the conferences held by such organizations are based on false pretences and copious banality, the sole intention being to undermine and downplay the efforts of strategic opponents of the US. Recently, the Brookings Institute's International Strategy and Strategy Project held a lecture on May 9, 2017 where it invited Bobo Lo, an analyst at Lowy Institute for International Policy, to speak. The topic of the subject, extremely interesting to the author and mentioned in the past, is the strategic partnership between China and Russia.

The main assumption Bobo Lo starts with to define relations between Moscow and Beijing is that the two countries base their collaboration on convenience and a convergence of interests rather than on an alliance. He goes on to say that the major frictions in the relationship concern the fate that Putin and Xi hold for Europe, in particular for the European Union, in addition to differences of opinions surrounding the Chinese role in the Pacific. In the first case, Lo states that Russia wants to end the European project while China hopes for a strong and prosperous Europe. With regard to the situation in the Pacific, according to this report, Moscow wants a balance of power between powers without hegemonic domination being transferred from Washington to Beijing.

The only merit in Lo’s analysis is his identification of the United States as the major cause of the strategic proximity between Moscow and Beijing, certainly a hypothesis that is little questioned by US policy makers. Lo believes Washington's obsession with China-Russia cooperation is counterproductive, though he also believes that the United States doesn’t actually possess capabilities to sabotage or delimit the many areas of cooperation between Beijing and Moscow.

What is missing in Lo’s analysis are two essential factors governing how Moscow and Beijing have structured their relationship. China and Russia have different tasks in ushering in their world order, namely, by preserving global stability through military and economic means. Their overall relationship of mutual cooperation goes beyond the region of Eurasia and focuses on the whole process of a sustainable globalization as well as on how to create an environment where everyone can prosper in a viable and sustainable way. Doing this entails a departure from the current belligerent and chaotic unipolar world order.

Moscow and Beijing: Security and Economy

Beijing has been the world's economic engine for over two decades and shows no signs of slowing down, at least not too much. Moscow, contrary to western media propaganda, has returned to play a role not only on a regional scale but as a global power. Both of these paths of military and economic growth for China and Russia have set things on a collision course with the United States, the current global superpower that tends to dominate international relations with economic, political and military bullying thanks to a complicit media and corrupt politicians.

In the case of Beijing, the process of globalization has immensely enhanced the country, allowing the Asian giant to become the world's factory, enabling Western countries to outsource to low-cost labor. In this process of economic growth, Beijing has over the years gone from being a simple paradise for low-cost outsourcing for private companies to being a global leader in investment and long-term projects. The dividends of years of wealth accumulation at the expense of Western nations has allowed Beijing to be more than just a strategic partner for other nations. China drives the process of globalization, as recently pointed out by Xi Jinping in Davos in a historic speech. China's transition from a harmless partner of the West to regional power with enormous foreign economic investments place the country on a collision course with Washington. Inevitably, Beijing will become the Asian hegemon, something US policymakers have always guaranteed will not be tolerated.

The danger Washington sees is that of China emerging as a regional superpower that will call the shots in the Pacific, the most important region of the planet. The United States has many vested interests in the region and undeniably sees its future as the leader of the world order in jeopardy. Obama's pivot to Asia was precisely for the purposes of containing China and limiting its economic power so as to attenuate Beijing’s ambitions.

Unsurprisingly, Washington's concerns with Moscow relate to its resurgence in military capabilities. Russia is able to oppose certain objectives of the United States (see Ukraine or Syria) by military means. The possibility of the Kremlin limiting American influence in Eastern Europe, the Middle East and Eurasia in general is cause for concern for American policy makers, who continue to fail to contain Russia and limit Moscow’s spheres of influence.

In this context, the strategic division of labor between Russia and China comes into play to ensure the stability of the Eurasian region as a whole; in Asia, in the Middle East and in Europe. To succeed in this task, Moscow has mainly assumed the military burden, shared with other friendly nations belonging to the affected areas. In the Middle East, for example, Tehran's partnership with Moscow is viewed positively by Beijing, given its intention to stabilize the region and to eradicate the problem of terrorism, something about which nations like China and Russia are particularly concerned.

The influence of Islamist extremists in the Caucasian regions in Russia or in the autonomous region of Xinjiang in China are something that both Putin and Xi are aware can be exploited by opposing Western countries. In North Africa, Egypt has signed several contracts for the purchase of military vehicles from Moscow, as well as having bought the two Mistral ships from France, thereby relying on military supplies from Moscow. It is therefore not surprising that Moscow and Egypt cooperated with the situation in Libya and in North Africa in general.

In Southeast Asia, Moscow seeks to coordinate efforts to reach an agreement between Afghanistan, Pakistan and India. The entry into the Shanghai Cooperation Organization (SCO) of New Delhi and Islamabad (Tehran will be next), with the blessing of Beijing as the protagonist of the 2017 SCO meeting, is a keystone achievement and the right prism through which to observe the evolution of the region. Moscow is essentially acting as a mediator between the parties and is also able to engage with India in spite of the dominating presence of China. The ultimate goal of Moscow and Beijing is to eradicate the terrorist phenomenon in the Asian region with a view to what is happening in North Africa and the Middle East with Iran and Egypt.

Heading to a Multipolar World Order

The turning point in relations between Moscow and Beijing concerns the ability to engage third countries in military or economic ways, depending on these countries’ needs and objectives. Clearly in the military field it is Moscow that is leading, with arms sold to current and future partners and security cooperation (such as with ex-Soviet Central-Asian republics or in the Donbass) and targeted interventions if needed, as in Syria. Beijing, on the other hand, acts in a different way, focusing on the economic arena, in particular with the Asian Infrastructure Investment Bank (AIIB) at its center.

Initiatives such as the One Belt One Road (OBOR) and the Maritime Silk Road have the same strategic aim of the Russian military initiative, namely, ensuring the independence of the region from a geo-economic perspective, reaching win-win arrangements for all partners involved. Naturally, the win-win agreement does not mean that China wins and then wins again; rather, a series of bilateral concessions can come to satisfy all actors involved. An important example in this regard that explains the Sino-Russian partnership concerns the integration of the Eurasian Union with the Chinese Silk Road. The Russian concerns over the predominant status of the Chinese colossus in Central Asia have been assuaged by a number of solutions, such as the support of the OBOR infrastructure program to that of the Eurasian Union. Beijing is not interested in replacing Moscow's leading role the post-Soviet nations in Central Asia but rather with providing significant energy and economic development to particularly underdeveloped nations that are in need of important economic investment, something only Beijing is able to guarantee.

The linking of the Eurasian Economic Union (EEU) with the One Belt One Road initiative guarantees Moscow a primary role in the transit of goods from east to west, thereby becoming the connecting point between China and Europe while expanding the role and function of the EEU. All participants in these initiatives have a unique opportunity to expand their economic condition through this whole range of connections. Beijing guarantees the money for troubled countries, and Moscow the security. The SCO will play a major role in reducing and preventing terrorist influence in the region, a prerequisite for the success of any projects. Also, the AIIB, and to some extent the BRICS Development Bank, will also have to step in and offer alternative economic guarantees to countries potentially involved in these projects, in order to free them from the existing international financial institutions.

One Belt One Road, and all the related projects, represent a unique occasion whereby all relevant players share common goals and benefits from such transformative geo-economic relationships. This security-economy relationship between Moscow and Beijing is  the heart of the evolution of the current world order, from the unipolar to the multipolar world. The US cannot oppose China on the economic front and Russia on the military front. It all comes down to how much China and Russia can continue to provide and guarantee economic and security umbrellas for the rest of the world.

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Authored by JC Collins via Philosophy of Metrics blog,

An Offensive Act of Self Defence to Save the Great School of Western Thought

It should be clear to all reasoning people with the ability for critical thinking that a pattern of cultural warfare has been unfolding against the Western world since at least the end of World War Two. The contrast between what was then and what is now is stark and frightening. It should serve as all the evidence we require to make the final determination about what has been happening.

The complete destruction of the traditional family unit has taken place through a process of indirect and direct attacks against the proven characteristics of Western civilization. It should be obvious that media and art have orchestrated a well-thought out strategy of cultural warfare against the masculine and feminine ideals and support columns of culture.

This strategy has attacked the natural and instinctual strengths of both men and women while promoting the weakness from within each of us as individuals. The battles of this cultural attack have been orchestrated and waged from inside the once great structures of Western thought.

Our educational buildings and curriculums have been used to erode and shatter all the ideals of natural and instinctual existence which have developed within the Western mind. The more we remember and rediscover, the more we realize that almost everything which is taught in our schools is either a corrupt twisted version of truth, or is an outright lie and fabrication.

If our curriculums were based on truth they would not need the constant changing and tweaking which takes takes place. Nor would it require involvement of government controls. All are tell-tale signs that something smells rotten in Denmark.

Over the years there have been various exposé and theories surrounding everything from the Frankfurt School, the Tavistock Institute, Lucis Trust, Freemasonic control of all things, Satanism, Bilderberg, Trilateral, Rhodes, and so on and so on. The plethora of culprits and evil organizations run the gambit of all human elitism and consolidation of wealth and power.

Not withstanding some truth to this large list of nefarious actors, and not to mention that the stated longterm goals of these groups and organizations match with the results which have been achieved since the end of the war, there is much more to the expanding collapse of Western civilization which needs to be considered.

In the posts The Wisdom of the Ancients – Part One and How Your Brain is Turned Against You, we reviewed our own accountabilities and responsibilities alongside some of the techniques which are used against us. It should be clear that we may have to listen to the sales pitch of a huckster but it doesn’t mean we have to believe that huckster. The theme from those posts is that if we don’t plan our own lives someone else will plan it for us. This is in essence what is happening.

We have been conditioned to follow and plan our lives along a very specific path which forces us further down into the systemic control mechanisms which have taken hold of our culture. You are left to plan your life within this strategic grid. This grid contains multiple pathways which all lead through the false teachings and methodologies which have been manufactured by those who wish to devolve and re-engineer Western civilization. The trap ensures you continue bouncing around inside the construct with an ever growing sense of confusion and hopelessness.

Those who do not agree with the teachings of the construct are made to feel regressive and are told they are the problem in society for which the construct exists in the first place. This script is supported by all forms of media, including movies, music, social media, both mainstream and alternative media, as well as school curriculums, from the early pre-school sessions to the “advanced” learnings which are communicated and rehearsed in colleges and universities.

Please ask yourself a question. Does it feel like our culture has been progressive? Everything that has a seed in human weakness and depravity has been promoted and expanded across the decades. Our culture is over-sexualized. We thieve and betray one another over the smallest rewards. The murder of unborn children is accepted as righteous even though it ruins the emotional spirit of the mother. Racism against anything rooted in traditional Western culture is out of control. Our children are taught at an early age about the degenerate sex world. Massive migration has undermined the Western ideals and systems of belief which have been a part of its growth and greatness for thousands of years. Alcoholism is both openly promoted and applauded through the subtle insinuations in the media. The rampant fragmentation of the family unit and a corrupt and unreliable system of law which supports that fragmentation are the greatest loss we have experienced. This is all supported by an educational system which is reducing critical thinking and dumbing down generations.

This does not feel progressive. When we consider the stark changes which have taken place over the last eight decades we should come to the conclusion that it is in fact regressive. All of the technological advancements would still have taken place without the corruption of Western civilization, so any form of counter-argument about science and the advancement of medicine and technology being possible because of this “progressive” culture stands in opposition and denial of the leaps made during the agricultural and industrial revolutions.

Similar lines of thought regarding colonialism and the slave trade are often made by the regressive left educational institutions and supporting media. But these arguments also stand in opposition to the truthful history of the world where we find that all cultures had forms of colonialism and slave trades are wide and diverse, with there being more slavery in the world today than at any other time in world history.

The disease has burrowed itself so deep into our institutions that it is hard to imagine how we would remove it without completely destroying the host. But what choice to we have at this late hour? Continuing as we have been is tantamount to surrender and shackling our descendants with an unthinkable ideology of absolute sameness and collectivism.

It’s interesting that more and more students are coming out of the university system and understanding that they in fact understand nothing. The loss of critical thinking and a cultural anchor point, both of which have been a part of the collective-socialist strategy, are now beginning to awaken more of those who have been traversing through the system. It’s almost as if nature and instinct are re-emerging from within the individual minds of the construct and attempting to establish new anchor points.

Now is the time to act and reverse the momentum which has thus far worked against us. We need to tear down the institutions and framework of the simulated world which has built up around us. The great school of the Western mind cannot be destroyed and it will never stop learning. In fact, this challenge, the one we have been faced with now for generations, could very well end up being one of our greatest lessons and opportunities for advancement.

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For commodity traders operating in the Information Age, Bloomberg reports that just good old trading doesn’t cut it anymore… "Everything is transparent, everybody knows everything and has access to information."

Unlike the stock market in which transactions are typically based on information that’s public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage.

Just ask Noble Group…

At a panel discussing ‘What’s Next for Commodity Trading: Drivers, Disruptors and Opportunities’, Bloomberg reports that Sunny Verghese, the chief executive officer of food trader Olam International Ltd., lamented declining margins.

“The consumers and producers are trying to eat our lunch. So we got to be smart about differentiating ourselves,” he said.

As market participants’ access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage — or gains made from a differential in prices — shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that’s key to the production and distribution of raw materials, and also providing financing for the development of such assets.

“The most valuable commodity out there is information, and the most useful information is the proprietary, critical information that you obtain from your own supply chain,” said John Driscoll, the chief strategist at JTD Energy Services Pte, who has spent more than 30 years in the petroleum trading industry in Singapore.

 

“You have to have skin in the game. You have to have access to assets, whether it’s infrastructure, terminals, vessels or refineries.”

It’s critical for commodity traders to evolve as margins have declined because of more transparency and “price arbitrage has disappeared,” said Olam’s Verghese. For example, the number of price quotes published by agencies such as S&P Global Platts and Argus, which assess the value of commodities globally, have increased about 15 times since 1990, according to Verghese.

While “arbitrage is dead,” traders will “continue to have substantial opportunity and disruption but the way of capturing that opportunity becomes more sophisticated,” Mercuria’s Jaeggi said.

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