The Commodity Markets Outlook in eight charts

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. Agricultural prices are expected to ease as well in this year and next amid improved supply conditions. Metal prices are set to remain steady in 2024, before rising slightly in 2025. Although the price forecasts assume no further conflict escalation, risks remain tilted to the upside, stemming from the possibility of conflict in the Middle East and its consequent impact on energy supplies.

Commodity price forecasts

Index, 100 = 2015-19 average

Commodity prices fell 3 percent in 2024Q1, driven by lower energy prices alongside relatively stable agriculture and metals prices. Energy prices declined 3 percent in 2024Q1(q/q), mostly in response to lower natural gas and coal prices. However, oil prices exhibited significant volatility, responding to escalating tensions in the Middle East and a supply outlook that was tighter than anticipated. Agriculture prices saw minimal change, with decreases in food and fertilizer prices balanced by a surge in beverage prices, attributed to supply shortages induced by adverse weather conditions. Meanwhile, metal prices remained generally unchanged during the quarter, with a decline in iron ore prices offsetting increases in other metal prices.

Commodity price indexes

Brent crude oil prices surpassed US$91/bbl in early April, driven by escalating geopolitical tensions and further production cuts by OPEC+. Oil prices have experienced considerable volatility amid intensifying concerns about the conflict in the Middle East, tight supply conditions in response to OPEC+ production cuts, and a strengthening of global industrial activity. Recent reductions in U.S. inventories, coupled with revised projections from the International Energy Agency shifting from a predicted surplus to a modest deficit, have further bolstered market confidence. Geopolitical developments in the Middle East and disruptions in Russia’s refinery sector since mid-March have heightened concerns about broadening instability in oil supplies. Oil prices are anticipated to average to US$84/bbl in 2024 (up from US$83/bbl in 2023), before tapering to US$79/bbl in 2025.

Brent prices

Natural gas prices plummeted in 2024Q1, reaching levels almost 40 percent lower than a year earlier. The European benchmark fell by 35 percent in the first quarter of 2024 (q/q), driven by high inventories, reversing gains seen in the previous quarter. Similarly, the U.S. natural gas price fell by 22 percent in the quarter, reflecting robust domestic production and subdued demand attributable to mild weather conditions. In contrast, Japan's LNG benchmark registered a modest 4 percent increase quarter-on-quarter, driven by heightened demand in the region, particularly from China, which regained its status as the world's largest importer in 2023. Natural gas prices are forecast to remain significantly depressed in 2024 due to ample global storage levels and ongoing adjustments in trade patterns, particularly concerning Russia. However, a reversal is anticipated in 2025, with prices expected to rise as a result of an uptick in the U.S. benchmark, propelled by increased LNG exports facilitated by the commissioning of new terminals.

Natural gas prices

Agriculture prices edged up in early April, driven by a surge in cocoa and Robusta coffee prices. Food commodity prices declined by 4 percent in 2024Q1 (q/q), attributable to favorable supply conditions and robust exports from the Black Sea region. In contrast, unfavorable weather conditions, in part due to El Niño, pushed beverage prices—particularly cocoa and Robusta coffee—to record highs by the end of 2024Q1, a trend that continued in April. Food prices are expected to experience a marginal decline in 2024 and 2025, buoyed by favorable supplies and moderating El Niño. In contrast, the beverage price index is anticipated to surge by 22 percent in 2024 before tapering off in 2025 as additional supplies enter the market.

Agriculture price forecasts

Food insecurity remains a pressing issue, particularly in regions affected by conflict. Armed conflicts, economic shocks, and extreme weather events are the principal factors driving food insecurity. The recent escalation of conflict in the Middle East and its ripple effects have intensified food insecurity, especially in conflict-ridden areas. The number of people experiencing acute food insecurity has risen sharply in recent years, to more than 282 million people in 2023 from 100 million in 2018.

Number of people facing high levels of acute food insecurity

Metal prices remained relatively stable amid ample supply and sluggish demand in major economies. Following a pronounced downturn in 2023 reflecting subdued demand across major economies, metal prices stabilized but experienced a notable upswing in April. Notably, copper prices surged to a two-year high in April amid supply concerns and signs of resilience in global economic activity. The metal price index is expected to remain relatively unchanged in 2024 before rising steadily in 2025, reflecting a pickup in global industrial activity and strong demand driven by growing production of renewable energy technologies.

Metal price forecasts

Commodity price forecasts are subjected to numerous risks, with the primary concern being the potential for further escalation of conflicts. Heightened geopolitical tensions have already exerted upward pressure on some key commodity prices. Gold prices—a barometer of demand for safe-haven assets—reached new record highs in April. A widening of conflict escalation in the Middle East poses the key upside risks to most commodity prices. Should this conflict escalate further, it could result in disruptions to energy supplies, which are pivotal for the production and transportation of other commodities. Additionally, there are other factors contributing to upside risks, such as diminished U.S. energy supply and disruptions caused by adverse weather and climate conditions, particularly impacting agriculture commodities. Conversely, the main downside risks to the forecast include the potential for increased OPEC+ supply and weaker-than-anticipated global economic growth.

Gold prices