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Below the Quote on World Bank Forecasts Commodities Surge, Yet Uncertainty Looms by Amit Gupta, Kedia Advisory

World Bank predicts commodities prices to stay robust in 2024-2025, defying pandemic lows by 38%. Despite marginal drops, oil, gold, and copper prices set to climb amidst geopolitical tensions. However, unforeseen conflicts and weather patterns pose risks, tempering optimistic projections.
Highlights
Commodities Prices Projection: The World Bank anticipates a marginal decline in commodity prices for 2024 and 2025 but expects them to remain significantly above pre-pandemic levels, by approximately 38%.
Crude Oil Prices: Despite the overall trend, crude oil prices are forecasted to increase by 2% in 2024, attributed to heightened tensions in the Middle East.
Gold and Copper: Gold and copper prices are also expected to rise in 2024, by 8% and 5% respectively, due to various factors including geopolitical tensions and supply concerns.
Factors Supporting Prices: Geopolitical tensions, investments in clean energy transition, and China's industrial and infrastructure investment are cited as forces keeping commodity prices high.
Upside Risks: The World Bank notes upside risks mainly stemming from problems in the Middle East, which could lead to conflict-driven rises in commodity prices, further delaying global monetary easing.
Energy Price Trajectory: Crude oil prices are projected to increase in 2024, with Brent crude averaging $84 per barrel, but the energy price index is expected to drop 3% in 2024 and a further 4% in 2025 due to declines in coal and natural gas prices.
Agricultural Prices: Agricultural prices are anticipated to soften in 2024 and 2025 due to increased supplies and moderating El Nino conditions, leading to declines in food commodity prices by 6% in 2024 and 4% in 2025.
Base Metal Prices: Base metal prices are forecasted to edge up in 2024 and 2025, driven by global industrial activity and clean energy technologies production, while iron ore prices are projected to decline further.
Gold Prices: Gold prices are expected to plateau at recent record highs in 2024, with slight dips in 2025 but remaining historically high, influenced by haven demand and central bank strategies.
Uncertainty Factors: Uncertainty persists due to regional tensions, potential conflict-driven supply shocks, US energy production, unexpected weather patterns, and global growth, all of which could impact commodity prices.
Conclusion
As the world grapples with geopolitical tensions and climate concerns, the World Bank's projections signal a resilient commodities market. While prices surge above pre-pandemic levels, uncertainties persist, highlighting the delicate balance between global demand, supply dynamics, and unforeseen events. Stakeholders must navigate this landscape with caution, prepared for potential disruptions while capitalizing on opportunities for sustainable growth in the commodities sector.

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