Global commodity prices rose 9.2% in February, following an 11.7% jump in the first month of 2022, mostly as supply fears stemming from the war in Ukraine boosted prices of all four commodity groups. 

The outlook for global commodity prices became more uncertain in recent weeks, as the fallout from the war in Ukraine took center stage. Although our Consensus still projects a decline in prices for all four commodity groups by year-end amid receding supply disruptions, the majority of our panelists upgraded their forecasts in February, and more upward revisions are likely in the coming weeks. Energy prices are expected to decline starkly this year on the back of higher crude oil supply stemming from OPEC+’s planned production hikes and stronger U.S. output. Similarly, fading Covid-19-related mining disruptions and softer industrial activity growth, amid waning governmental fiscal and monitory support in most developed economies, will likely drive a marked decline in base metal prices this year. Meanwhile, prices for precious metals are seen losing ground on falling gold and silver prices due to cooling industrial appetite and softer safe-haven demand. Finally, agricultural prices are also expected to decline this year. That said, a prolonged war in Ukraine and associated sanctions, coupled with uncertainty over the Covid-19 pandemic, represent huge demand and supply side risks to the outlook. FocusEconomics panelists expect global commodity prices to fall 2.9% year-on-year in Q4 2022 (last month’s projection: -9.6% yoy) and 9.4% in Q4 2023.


 

 


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