The Commodity Matrix: What Is The Resource Of Tomorrow, And Who Will Benefit From It?

Tyler Durden's picture

While it is impossible to predict where the S&P will be in 10 years (or even 1), one can safely make some assumptions about what the world will look like in a decade (assuming of course it hasn't blown up by then). It will be hungry, it will be thirsty, it will demand resources, and it will be crowded (and it will certainly have lots and lots of wheelbarrows carrying pieces of paper to and fro the local bakery). Implicitly then, countries which control the production and export of various key natural resources and commodities channels will become increasingly more strategic and important. However, for some economies, such as the Middle East, whose entire export-based welfare is reliant on a core set of commodities, this export-benefit may be a doubled-edged sword, should it lead to militant antagonism by one time friends and outright enemies, and/or complacency leading to lack of revenue stream diversity.  In order to determine who the key resource players in the future will be, we present the below commodity trade matrix which answers two questions: how important is a commodity to a country, and how important is a country to a commodity. As GS notes, those on the riskier side of this equation are economies that are heavily reliant on oil, such as the Middle East or even Russia (which albeit scores better on other hard commodities). On the other hand, food exporters enjoy relatively better diversity in their trade portfolios. We highlight the LatAm economies here, while Canada and the US also look healthy. Will food (and water) be the oil of the future, and will the next resource war be not over black, or even yellow, gold, but, pardon the pun, edible gold?

Some additional observations via Goldman:

Not all countries are blessed with abundant resources, and even among those that are, some countries have benefitted a great deal more than others as a result of the quality of their institutions. Indeed, resource wealth can, and has, tempted institutions to retain the revenues narrowly, rather than distribute  them broadly or develop others parts of the economy. This is the reason why the presence of resources hasn’t historically guaranteed economic success. Australia, Canada, Russia, Brazil and South Africa are countries that have high levels of hard commodities per capita, while Argentina and the US should be added to the list if soft commodities are included.

But what are the resources of the future? We think it very likely that food, water and therefore land, will become increasingly important, tilting the advantage in favour of those capable of feeding the next billion people. As two of the world’s largest populations industrialise (hence producing less of their own food) and become wealthier (and hence hungrier), the way food flows around the world is likely to change significantly. Russia, South Korea, Japan and much of Western Europe are major food importers currently, while Brazil, Argentina, the US, Australia, Thailand and Canada sit on the other end of food trade. Here we have to mention Africa and India as regions with huge potential, but in need of greater institutional support to deliver it.

The current debate on the resources curse (the potential for resource-rich countries to become imbalanced) is also important. Being heavily reliant on a particularly commodity is risky as a result of the possibility of big shifts in the global economy, innovation-led substitutes or new discoveries. It is not implausible, for example, to imagine EM consumers extinguishing their demand for cigarettes just like their health conscious Western brethren did a few decades ago. This puts tobacco-heavy African economies like Zimbabwe at significant risk. Above is a commodity trade matrix to answer two entwined questions: how important is a commodity to a country, and how important is a country to a commodity? As expected, those on the riskier side of this equation are economies that are heavily reliant on oil, such as the Middle East or even Russia (which albeit scores better on other hard commodities). On the other hand, food exporters enjoy relatively better diversity in their trade portfolios. We highlight the LatAm economies here, while Canada and the US also look healthy.

The last question is which countries have succeeded despite resource deficits? Japan and South Korea stand out here, which cements our argument that necessity, in this case driven by constraints, is the mother of innovation.

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ACP's picture


-The Late, Great Charlton Heston

Pure Evil's picture

"From my cold dead hands."

I guess now I can go rip that rifle from his cold dead hands.

TwoShortPlanks's picture

In a world where eating healthy is rapidly becoming an unaffordable luxury...BULLISH FAST FOOD AND STOMACH BANDS, BITCHES!

markmotive's picture

Most assumptions rely on China doing what it did last decade...

Some argue that commodity prices are going to collapse as China slows.

Gary Shilling on the Chinese hard landing:

akak's picture


Most assumptions rely on China doing what it did last decade...

So you are assuming that they might stop eating?

markmotive's picture

Are you assuming they will continue growing at double-digit rates?

akak's picture

No, but I AM assuming that they are going to continue to eat.

Are you making the opposite assumption then?

Oh regional Indian's picture


Real world looks to be going the way of the Dodo.


LawsofPhysics's picture

So what you are saying is that the "new" world can simply be unplugged- FAIL.

Didn't junk you by the way.

ACP's picture

You might need many different rifle & pistol models are out of stock & backordered...

Chief KnocAHoma's picture

Everyone relax.... The World won't be crowded... Boomers will die off... Looks like we are about to have one mother of a war... And the result is population control a d rebalance.

See... Just that simple ... Problem solved.

Bobbyrib's picture

Pfft...who is going to listen to our government and go fight a war with some country not threatening our country?

Yeah, I would go overseas to fight a war some assholes started with people I have no "beef" with. /sarcasm. If I made it back home alive I can look forward to no jobs and concentrated wealth in the hands of the 1%. You would have to be an idiot to show up if you get drafted for a war for this country now. Let the politicians send their sons or the sons of the 1% off to war (will never happen), afterall they are the war's beneficiaries. The social contract is no longer intact. The assholes who run our country have torn it up and are telling us it still exists. No way I would fight for this "country" now.

Let the illegal or even legal immigrants they let into the country every year that steal the average Americans' jobs and/or push down wages go fight the wars. 

ACP's picture

Here's the problem:

This is a read-between-the-lines article. If there are 11 million illegals living in the US, how the HELL is there a shortage of farm labor? Hmm...I wonder if government handouts have anything to do with it?

Bobbyrib's picture

Your theory seems more plausible than Business Week's. If the people who come here to take jobs and lower wages don't fight for this country, who will?

ACP's picture

The sad thing is, I've known a lot of LEGAL immigrants who come to the US and are furious about the racial amnesty(ies), but don't speak up about the injustice because they see the hate coming from the left and think that they will be "carted away" like they would in their home country.

As a side note, I've noticed (East) Indians out here in the West - nearly all LEGAL immigrants - have been targeted for robbery because 1) They have gold and 2) They have assimilated & adapted to US laws and social norms, but think that if they arm themselves, they will be looked down upon by the touchy-feely jokers out here. Hence, most are defenseless.

The amount of brainwashing and PC bullshit is totally destroying the US, as well as destroying the immigrants who come to this country to actually work to build a better life for themselves. It's so hard for me to believe that we are repeating the "Fall of Rome," to the letter. Almost like the fucks in power are using it as a manual. WHY THE FUCK do we need history lessons in school? Obviously, no one is heeding the lessons!

falak pema's picture

Just read Roman history. When they went into that deficit spending spiral, nobody local wanted to fight their wars to repump the riches pump by beating up and raping an "alien" nation. So what did Caracalla do when the shit hit the fans in Rome?

He conveniently made citizen the local "slave" population; aka the nonvoting serfs!

Didn't stop the rot. As those "illegals" now "legals" started thinking like the original "legals" and refused to fight those wars!

And Rome went...boom! And Constantinople became new Rome. One reason why it went boom was that the Romans hired the Barbarians to fight their wars. Fatal flaw along with deficit spending.

But it took one hundred years! Things moved slower then! 

surf0766's picture

Fuck the boomers. They caused all this dam mess we are in. Free love. Dope on every corner . Doubling  of housing prices. Stealing made legal. Now they want us to guarantee their retirement 401k savings. Please. They are P.O.S who sucked the world dry. Self centered ME generation. Piss off.


Sorry .. had to rant.

RSBriggs's picture

As a boomer and a Vietnam vet, I have to say, that's bullshit and FUCK YOU - do you even have any idea what a 401(k) SAVINGS PLAN is, or how the money gets into it?. 

TitusDuksas's picture

As a British boomer you can add free education to that list and,as a graduate in the early '70's, a choice of jobs. Now happily retired at 59 with a generous pension and nest egg generated by the housing boom that you mentioned, from £35,000 to £350,000, a tad more than doubling methinks.

On the other hand I am pushing 60 so you can't have it all, but one can't help feeling quite lucky about life. That's about it really surf boy, and no swearing (see education above).

tabasco71's picture

I note the subtle mocking in your post.

If your house is only worth £350k, I doubt you are in a sufficiently powerful position to resist the "pitch-dark roll-call of the global economy" as it sweeps across you.  Pardon the drama, but I like that phrase.

Maybe you don't see a future in which the stress of circumstance results in questions (about what current generations owe their predecessors) developing into actions by which you boomers end up actually not getting what you thought you were.  Only you'll be 15 years weaker and slower than you are now and will have ceased to become the fulcrum around which societies revolve.... marginalised if you will.

The younger/middle-aged will have figured out where the money is, designed compelling schemes to divorce you from it (or simply taxed it from you) so I hope at that time, your memories of today are sufficient to keep you warm.

I don't believe I needed to swear either. Touche mon ami.

Go Tribe's picture

I actually blame the "greatest" generation. Bloated government bureaucracy based on prussian military logic, idiotic wars, expansion of military-industrial complex, misguied social programs, marginalization of blacks into inner cities, debasing of currency, etc.  The Boomers are simply the overstuffed, spoiled, checked-out progeny who modeled the "worst" generation.

r3phl0x's picture

At least by killing millions of 1st and 2nd world adult males - the greatest generation gave an Unprecedented Gift to their American Boomer children. America emerged from WWII with powerful industry, global military, and lots of broken property in Europe for it to repair/replace, with fewer surviving, productive European, Japanese, and Russian men to compete against it. Not to mention the technological progress that would shortly enable space flight, the computer revolution and internet, etc.

The Baby Boomers are going to give their American kids a giant Bucket of FAIL: a country depleted of oil, a world that is overcapacity, a globalized economy where they get to compete with Foxconn slaves making $2/day, an unbelievable amount of student debt, very few - if any - earthshattering (non-incremental) improvements in technology that will enable real economic growth, massive government overspending, etc.

Quantum Nucleonics's picture

People will be shocked to discover that in the not too distant future, collapsing populations will be the issue, not feeding the next billion.  Countries representing a majority of the world's population now have a birth rate below replacement.  Countries with skewed male-female ratios, like China and India, make their birth rates much worse than they appear.  There will be latent population growth for a few more decades, but by the end of this century there may be billions fewer people than there are today - and that's assuming there are no major conflicts or Spanish Flu-like pandemics.

Arkadaba's picture

Oh I think Canada might be the winner in that category:

LongSoupLine's picture

no way, it's the polar ice caps. they have more water than...oh shit...nevermind.

CPL's picture

I was about to say. The world map is changing and will further change. Take note of the locations where we are mining, logging, farming right now on the world with no poles.


If the immedicacy of the problem of the over forestation and mining practices in these areas are concerning.  It's because they won't be able to get to it sooner than anticipated.


Everyone has made plans around the planet well in advance for this contingency.  It dawned on me that's why nobody talks about the obvious population problem in Asia.  Simply because things will shift enough to displace or cull the populations there.  Same reason nobody is in a big hurry to seal up Fukishima.  It'll all be underwater soon.

Arkadaba's picture

Yep whether you think it is human induced or natural cyclical changes, it is happening. Stephen Harper might be a snake but he is not an idiot:

I haven't lived that long yet but in my lifetime have seen winter snowfalls (in Canada) go from abundant to zilch. I remember three foot snowfalls tunnels - and now - in the area where I grew up - dusting of snow at Christmas.

Sucks being gen-x and yes there are some truths there.


Jack Burton's picture

"where's water?"  Right outside my front door. In the form of Lake Superior, largest of the great lakes and deepest. One of the largest volumes of fresh water in the world. 

One expects that by the end of this decade some thristy parts of America will be eyeing this water source. Tough Canada and the USA must jointly manage this great fresh water source.

SOme years back a bright company came up with the idea of using tankers to load up with fresh water on the lake and then sail the seaway out to the Atlantic and then on to the Middle East where a full tanker of clean fresh drinking quality water was quite valuable. Before even one tanker could load, the USA/Canada joint commission on lake management halted the attempt to load. Since then I have heard nothing of any other plans to export water.

But it is a sure bet that they will be back in one form or another. There is big money in all that drinking quality cold fresh water out there.

Uber Vandal's picture

When you take in consideration the importance of the Great Lakes, and the Ogallala aquifer, the "fly over" states may be taken slightly more seriously.

A funny thing, if you look at a map of the midwest railroad network, the Canadian National and Canadian Pacific pretty much have the lions share of rail traffic in the Great Lakes region. And, some of the larger banks such as M&I have been taken over by Canadian firms.

Also, the further north you go in Wisconsin and UP Michigan, the more you might think you are in Canada, eh.


Jack Burton's picture

Yes indeed! The Canadian National bought out our local short haul railroad and ship loading operation for Iron Ore.

I'll say one thing for CN, they know how to run and manage a rail road!

Rumor has it that our local operation is now one of the most profitable in the nation.

Aguadulce's picture

+1 for mentioning ogallala. Huge underground lake that supports the desert that is western NE, Ok, and eastern CO to actually produce food.
One of the biggest assets the US has. Also lets us frack shale gas in the middle of nowhere too.

bankruptcylawyer's picture

the ogallal is being drained quickly. there is no way to replenish long term underground aquifer resovoirs without waiting a very long time, potentially millenia or centuries,  for nature to fil it back up . the only option to keep the heartland farms wet will be to build an enormous set of pipelines from northwestern canada and alaska , bringing massive quantities of water that ordinarily flow to the the artctic and pacific ocean, towards the interior of the u.s. by pipe. there has been plans to do this for decades. 

it's not perhaps the most environmentally friendly idea. certainly it resembles the tar sands solution to oil scarcity. but it's going to happen in the long run, just as sure as the ogallala is drying up. t boone pickens is betting on it.  

ZeroAvatar's picture

I recently read it takes 6000 years to replace acquifer. Can't recall source.

Arkadaba's picture

And they even play hockey there!

Bobbyrib's picture

Water will be an especially valuable resource when fracking eventually poisons our water supply with chemicals. No one even knows what these companies dump into the ground. Anyone who knows anything about water, knows it will find its way into the area's water supply. Clean water was going to be a resource in short supply without fracking. Imagine with fracking added in how much clean drinking water will be worth.

CPL's picture

I would never drink or eat anything out of the St Laurence river. Ever. You know how polluted it is?


There's a beach in my area that has a life guard and a mercury warning for the last ten years.  Cool cold and refreshing indeed.  The amount of heart medication in the river is the reason nobody is insane enough to eat anything out of it...then there's 3M and the rest of them.

Anusocracy's picture

The atmosphere is an ocean of water.

nofluer's picture

Great idea - bad plan. To reap the gold from H2O you must package it. (Packaging restricts access and allows variable pricing.)

The packages must be in little plastic bottles so the consumer must pay HUGE prices for very limited amounts. OR the package must be a pipeline - direct from provider to consumer, that can be metered - to force the consumer to pay HUGE prices for limited consumption. Now, if your tanker was part of a "Water the ME" stock/capital venture plan... and it unloaded at a bottling plant or the head of a water pipe... I'm thinking that it would not have run into reisitance.

buzzsaw99's picture

You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!

Jack Burton's picture

One of the great movie lines of all time!  Especially if you didn't know the ending until you saw it.

Schmuck Raker's picture

I don't know about great. Late, though - not at all.

While everybody and his kid brother seem to recall "Planet of the Apes"(personally I think the board game was even stupider) so fondly, or if they are a bit more "edgy" they worship him as an NRA spokesman-divinity, I wonder how many recall the 60s, or 70s, post-apocalyptic classic "OMEGA MAN".

Now that was some seriously bad-ass shit, way better than that Red Sea-parting-poofda-shite-fantasy religo-stroke-fest he should also be unable to rest peacefully after.


Number 156's picture

The demand for Tungsten is rising but I don't see it anywhere on this chart.

Jack Burton's picture

Indeed! Go long Tungsten, I hear demand is spiking. It's as Good As Gold!

Schmuck Raker's picture

"...long Tungsten, I hear demand is spiking."

I know there's a porn joke here somewhere...