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Commodities

For Macron, a first year in office of ups and downs

French President Emmanuel Macron's first 12 months in office have seen some highs and lows. Here, Thomson Reuters experts in commodities, energy and stocks take a look at how la République has fared in his first year.

This month marks a year in office for French President Emmanuel Macron.

Macron’s first 12 months in office have had their ups and downs. He has earned popularity on the global stage by presenting himself as a suave and energetic antidote to United States President Donald Trump. Domestically, though, he’s facing slipping approval ratings and criticism of his tightly closed leadership style.

Here’s a look at Macron’s domestic scorecard (so to speak) with insight from Thomson Reuters experts in their respective fields.

Agriculture

Agriculture is big business in France. In addition to being the global authority on all matters of cuisine, France is one of the world’s largest exporters of food products.

“Last year, production of major grains and oilseeds such as wheat, rapeseed and corn performed well, but wine production fell to historic lows as devastating spring frosts were followed by summer heat,” said Daniel Redo, Head of Agriculture Research at Thomson Reuters. “The failure of winegrapes and relative success of grains and oilseeds were driven more by weather than any major changes in government policy.”

A more policy-driven and notable story than a poor wine harvest was France’s butter shortage at the end of 2017, though the root causes of this date back to before Macron’s election. Fewer dairy producers, fixed local prices, and higher international prices have led many French farmers to export butter, rather than sell locally at lower, fixed prices. The result was supply problems and, in some cases, empty store shelves.

On the horizon for Macron and French agriculture is the ever-present debate on EU subsidies. Macron’s recent speeches have suggest the need to reform subsidies through the Common Agriculture Policy, which if realized, could lead to huge changes in the industry and long-lasting consequences for France and the EU. In addition, land purchases by foreign investors have raised local concerns on sale of French farmland.

A bunch of grapes are pictured at the Bollinger vineyard during the traditional Champagne wine harvest in Ay, France. REUTERS/Benoit Tessier
A bunch of grapes are pictured at the Bollinger vineyard during the traditional Champagne wine harvest in Ay, France. REUTERS/Benoit Tessier

Energy

Even in a nation that leads the world in nuclear-generated power, fossil fuels are making headlines. Macron has sought to meet or exceed his predecessor’s already-ambitious deadlines for pushing his country toward a sustainable future.

  • France banned hydraulic fracking in 2011 and Macron has gone one step further and banned all types of fracking. In December 2017, Macron introduced legislation to ban all drilling for oil and natural gas within all France and its territories after 2040 meaning it will be illegal to produce or explore for oil in French mainland and French overseas regions. All existing licenses will expire in 2040 and no new ones will be issued. France produces less than 20,000 barrels per day (bpd) of oil.
  • In the long run, France will end sales of petrol and diesel vehicles by 2040 as part of a plan to meet its targets under the Paris Climate Agreement. In fact, France is aiming to become a carbon-neutral country in around 2050.
  • Macron has also decided to shut down all coal power plants in 2021, two years earlier than former President Francois Holland’s plan to close them in 2023. The measure is unlikely to have an impact on oil demand.
An oil pump is seen at sunset outside Vaudoy-en-Brie, near Paris, France April 23, 2018. REUTERS/Christian Hartmann
An oil pump is seen at sunset outside Vaudoy-en-Brie, near Paris, France April 23, 2018. REUTERS/Christian Hartmann

Stocks

In the last year, the CAC 40 index, a major French stock benchmark, has returned a 7.5 percent gain, outperforming the STOXX 600 by almost 5 percent. It also outdone many of its European counterparts, including those in Germany and Spain.  Looking at aggregate Analyst Revisions across the STOXX 600, French stocks are ranked fifth-most bullish with Total, LVMH, BNP, Vinci, and Airbus contributing most to the country-level rank.   However, when comparing current CAC 40 performance against the prior five- year period (April 30, 2012 to April 30, 2017) before Macron began his presidency, it has underperformed significantly as the average five-year return was close to 15 percent.

People walk on the esplanade of La Defense in the financial and business district of La Defense, west of Paris, France March 26, 2018. REUTERS/Gonzalo Fuentes
People walk on the esplanade of La Defense in the financial and business district of La Defense, west of Paris, France March 26, 2018. REUTERS/Gonzalo Fuentes

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