WB Commodity Markets Outlook

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WB Commodity Markets Outlook

Context: World Bank’s April 2020 Commodity Markets Outlook has been released.

Commodity Markets Outlook provides market analysis for major commodity groups — energy, metals, agriculture, precious metals, and fertilizers.

The report forecasts prices for 46 key commodities, including oil. It is published in April and October.

Key observations:

  1. The coronavirus (COVID-19) pandemic has impacted both demand for and supply of commodities: direct effects from shutdowns and disruptions to supply chains, indirect effects as economic growth stalls.
  2. Effects have already been dramatic, particularly for commodities related to transportation.
  3. Oil prices have plunged and demand is expected to fall by an unprecedented amount in 2020.
  4. While most food markets are well supplied, concerns about food security have risen as countries announce trade restrictions and engage in excess buying.
  5. The halt in economic activity has taken a toll on industrial commodities such as copper and zinc, and metal prices overall are expected to fall this year.
  6. Commodity-dependent emerging market and developing economies will be among the most vulnerable to the economic impacts of the pandemic.

What next?

  1. Importers and exporters of commodities are likely to see some long-term shifts in their markets due to the pandemic.
  2. These include increasing transport costs due to enhanced border checks, unwinding supply chains (companies might prefer to source from closer by for instance), substituting for imports with domestic goods as transport costs rise and changing consumer behaviour.
  3. The break in emissions caused by the restrictions may also increase public pressure for greener transport and lowered fossil fuel use.

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