Global commodities forecasts & trends (2024)

FAQs

What is the forecast for commodities in the world? ›

Commodity prices are projected to experience a slight downturn in 2024 and 2025 but are expected to remain above pre-pandemic levels. Energy prices are expected to decline by 3 percent in 2024, as notably lower prices of natural gas and coal offset higher oil prices, followed by a further decline of 4 percent in 2025.

Since mid-2023, however, the World Bank's index of commodity prices has remained essentially unchanged. Assuming no further flare-up in geopolitical tensions, the Bank's forecasts call for a decline of 3% in global commodity prices in 2024 and 4% in 2025.

Are commodity prices rising? Commodity prices, such as crude oil and agriculture products, rose in 2021 and 2022, partly due to supplies failing to keep pace with growing demand.

Crude Oil

Crude oil is the commodity with the highest trading volume. It is used for the extraction of petrol, diesel, and petrochemicals. Brent oil and West Texas Intermediate (WTI) are the two most traded types of crude oil. The price of crude can fluctuate according to the level of industrial activity.

What About Crude Oil? Crude oil is by far the biggest commodity market, and oil prices were the talk of the town for much of 2022.

Gargano and Timmermann (2014) use commodity spot indices to examine the predictive ability of several variables over a somewhat longer sample period than typically analyzed in the existing literature. They find that industrials, metals, and the broad index are most predictable.

Strategists are tipping the commodity boom to fade in the 2023 financial year as elevated prices and rising interest rates take their toll on demand for iron ore and crude oil, pressing pause on the sector's spectacular bull run.

What is a commodity future? ›

A commodity futures contract is an agreement to buy or sell a particular commodity at a future date. The price and the amount of the commodity are fixed at the time of the agreement. Most contracts contemplate that the agreement will be fulfilled by actual delivery of the commodity.

A GlobalData poll found that gold, lithium, and copper are among the commodities set to see the greatest price increases in 2024.

Opinions are the cheapest commodities on earth. Everyone has a flock of opinions ready to be wished upon anyone who will accept them.

What happens to commodities in a recession? As a general rule, when economies slow, industrial outputs decline due to fewer infrastructure projects and house building, causing the demand for commodities to fall and prices to decline.

Commodities don't do well in recessions

By contrast, gold has tended to shine during recessions as investors have reached for their safe-haven status. At the same time, the loosening of monetary policy and lower real interest rates has typically supported gold prices during economic downturns.

A commodity's futures price is based on its current spot price, plus the cost of carry during the interim before delivery. Cost of carry refers to the price of storage of the commodity, which includes interest and insurance as well as other incidental expenses.

As the name would suggest, future-facing commodities are those that will carry humanity forward as we take on the momentous task of decarbonising the world. These are the commodities that are essential to the energy transition, including lithium, nickel, cobalt, manganese, graphite and copper.

A commodity futures contract is an agreement to buy or sell a predetermined amount of a commodity at a specific price on a specific date in the future. Commodity futures can be used to hedge or protect an investment position or to bet on the directional move of the underlying asset.

Commodities stand to benefit from underinvestment and the clean energy transition. PIMCO has a positive outlook for commodities based on supply constraints, the transition to a net-zero economy, and their historical correlation with inflation.