Earlier this month, the World Bank published a paper pointing out that although global economic growth in 2024/25 is expected to be nearly half a percentage point lower than the average in the half decade before the Covid pandemic, average commodity prices are likely to remain close to 40% above 2015 to 2019 levels for energy and base metals, and 30% higher for food.
Various factors account for this deviation, ranging from oil-supply constraints and high demand from China to growth in metals-intensive investment in clean-energy technologies and heightened geopolitical tensions.
“Food and agricultural prices are expected to taper, but extreme weather remains a key risk as was evidenced by record high coffee and cocoa prices,” explains Farah Lotia, vice-president of risk and quantitative analytics at GTreasury. “The surge in gold prices is driven by a flight to safety and increased acquisitions by central banks, although with lower inflationary pressures demand may ease in the second half of the year.”
“Volatility is expected to remain especially high for natural gas and LNG, which remain scarce resources across the western world due to sanctions against Russia,” says André Jäger, senior vice-president Ion Commodities.
