Global commodity prices plummet July

Global commodity prices dived 12.0% month on month in July, following a 0.7% increase in June. The result marked the strongest contraction since the height of the Covid-19 pandemic in April 2020.

Global commodity prices were hit hard by slowing GDP growth and rising fears of a global recession ahead. Prices for 31 out of 34 commodities tracked by our panel of analysts witnessed a drop in prices in July as all four major commodities groups posted month-on-month declines. A contraction in quarter-on-quarter GDP in the world’s two largest economies—China and the U.S.—spurred fears of looming recession, thus hurting consumption prospects for oil and its derivatives, and driving a fall in prices. A similar narrative was at play in the base metals market. Mild Chinese growth amid lingering Covid-19 restrictions and property sector woes, coupled with slowdowns in developed  markets, boded poorly for industrial demand prospects and hit base metal prices in turn. Meanwhile, a stronger U.S. dollar during the month weighed on the pricesof precious metals in July. Lastly, agricultural prices were hit by weakening demand conditions and an improving supply backdrop after Russia and Ukraine signed a deal to resume grain exports via the Black Sea.




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