Global commodity price growth accelerates on a broad-based upturn in December

Global commodity prices rose 2.4% over the previous month in December, accelerating from November’s 1.9% increase and marking the third month-on-month increase in the last four months.

December’s upturn in prices was chiefly led by higher energy prices as OPEC+ committed to deeper oil output cuts, which caused global oil prices to jump. Meanwhile, improving sentiment ahead of the signing of a “phase one” trade deal between China and the U.S. supported prices for base metals, which stabilized in December following two months of decline. Notably, precious metal prices rebounded in December, largely on strong demand for platinum, and as relatively low global interest rates supported gold and silver prices. Lastly, agricultural prices rebounded in the same month as China pledged to boost its purchases of U.S. agricultural production and amid lingering supply concerns.

FocusEconomics Consensus Forecast panelists project global commodity prices to increase 1.1% in Q4 2020 over the same period in 2019 (previous edition: +0.7% year-on-year). The overall upturn should be broad-based, spearheaded by rising prices for base metals. That said, the outlook for global commodity prices remains highly volatile, with uncertainty regarding the China-U.S. trade war, fragile global growth, a potential further extension of the oil production cuts and geopolitical tensions all representing risks to the outlook. Global commodity price growth is seen accelerating further ahead, with panelists forecasting a 3.5% year-on-year gain in Q4 2021.


 


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