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What’s the outlook for commodity markets this year and next?

Elevated energy prices
The Consensus among our analysts is for energy prices to remain above their pre-Ukraine war levels until Q4 2024. A drop in Russia’s output and production cuts from OPEC, coupled with a recovering Chinese economy, will sustain prices. But Russia’s energy production is likely to fall by less than initially feared following the imposition of Western sanctions; other buyers—such as Turkey, India and China—are stepping in to fill the gap. Russian diesel exports to Turkey were at the highest in at least seven years in March for instance.

Agricultural prices on a downward trend
Prices for key agricultural commodities are forecast to decline steadily through to the end of next year, thanks to downward pressure from growth in grains production outpacing consumption. Much will depend on weather events—South America, a major agricultural producer, has been hampered by drought in recent years. The conflict in Ukraine is another source of uncertainty; the collapse of the Black Sea grain deal, currently due to expire in May, would hamper Ukrainian grain exports and push up prices.

Base metals going steady
Base metal prices are expected to dip only slightly in the coming quarters. Stronger demand from China should largely offset weaker GDP growth in developed economies, soft global goods demand and deflating housing markets as interest rates rise in most countries. Much depends on the pace of recovery in China’s housing market and announcements of further stimulus by Beijing, given that China is by far the world’s top consumer of base metals. Plus, strikes in key producers such as Chile, Peru and South Africa pose a risk to supply.

Precious metals sitting pretty
Our panelists expect precious metal prices to stay high compared to their historical average this year and next. For example, gold is seen trading at slightly under USD 2,000 per troy ounce, compared to a little over USD 1,000 for much of the 2010s and below USD 400 during most of the noughties. Elevated global uncertainty will continue to fuel safe-haven demand, and recovering global car production as semiconductor shortages fade will boost platinum and palladium demand.

Insights From Our Analyst Network 

On natural gas prices, analysts at ING said:
“US natural gas prices briefly traded below US$2/MMBtu in February and hit their lowest levels since September 2020. […] Weaker demand has come at a time when we continue to see supply growth. US natural gas production is expected to grow in the region of 2.2Bcf/day in 2023, which would take total output in excess of 100Bcf/day this year, which would also be record levels. US storage is expected to remain above the five-year average for the remainder of this year, which suggests a limited upside in prices throughout the year.”

On metals and energy, the EIU said:
“China’s reopening will be the single biggest factor in keeping a high floor under base metals and energy prices in 2023. Although supplies continue to be disrupted by the war, and as governments in the West continue to broaden the scope of sanctions on Russia, demand from state-led infrastructure and energy projects should prop up prices, especially in the second half of 2023.”  

A report cover about banking turmoil
 In this special report, we examine recent banking turmoil and its implications. We polled 21 of our analysts to get their insight on the following key questions:
  • Will further banks go bust in the next year?
  • How will recent bank collapses affect the U.S. and European economies?
  • Will recent events morph into a broader financial crisis?

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