According to the World Bank report –
Global commodity prices on a downward trend
According to data from the Office for National Statistics of the United Kingdom, the UK’s consumer price index (CPI) rose by 10.1% year-on-year in March, a drop from 10.4% in February, but higher than market expectations. The picture shows people shopping in a supermarket in Manchester, England.
According to the “Commodity Market Outlook” report released by the World Bank a few days ago, commodity prices will generally show a downward trend in 2023. It is expected that commodity prices will drop by 21% in 2023 compared with last year and remain stable in 2024. Many experts said in an interview with a reporter from the Economic Daily that under the background of continuous downward demand, commodity prices may decline moderately and volatilely, but the high inflationary pressure facing the global economy cannot be alleviated quickly.
Supply and demand continue to improve
At present, the global commodity supply and demand continue to improve. The report shows that since January this year, commodity prices have fallen by 14% and are 32% below the record high set in June 2022. This is the largest decline since the outbreak of the new crown epidemic. The report expects energy prices to fall 26% this year, with Brent crude expected to average $84 a barrel in dollar terms, down 16% from the previous year’s average. Non-energy commodity prices will fall by 10% in 2023 and 3% in 2024.
Multiple factors will affect the price trend of bulk commodities. Lian Ping, Chief Economist of Zhixin Investment and Director of the Research Institute, believes that the most important factor affecting the price of bulk commodities is the decline in demand. Weakening, while the structural impact of the Ukraine crisis on global commodity supply and demand is gradually diminishing. In addition, the Fed’s tightening monetary policy also has an impact on commodity prices.”
The World Bank report also pointed out that commodity prices still face many uncertainties. For example, oil supply from Russia and OPEC could be lower than expected, tighter credit conditions could hamper the ability of oil or coal companies to increase supply elsewhere, and tighter regulation of fossil fuels could discourage related investment. Geopolitical concerns are also an important factor affecting commodity prices. Additionally, concerns over freak weather could also push commodity prices higher, given that a drought in Europe in the summer of 2022 will severely impact river flows and food production.
Guo Chaohui, chief commodity research analyst at the CICC Research Department, said that recent commodity market price trends are mainly driven by demand expectations and actual performance. “The weakening of global demand has significantly suppressed the prices of bulk commodities. The European and American manufacturing purchasing managers’ indexes (PMI) continued to shrink, and energy demand was under pressure. Overlapping risk factors such as the spread of the US and European banking crises and the US debt ceiling, macro expectations have further deteriorated. , to suppress overseas oil and gas, and the prices of safe-haven assets such as gold will rise.” Guo Zhaohui believes that in the short term, demand expectations may dominate the direction of oil prices, and the current pessimistic expectations that have been priced may not be supported by actual data. Correction, if the subsequent fundamentals do not deteriorate further, the weak oil price situation may improve.
Inflationary pressures remain
Although energy prices are on a downward trend, high global inflationary pressures may not be effectively alleviated in the short term. The report shows that the current prices of various commodities are still much higher than the average level between 2015 and 2019, and the price of natural gas in Europe this year will be nearly three times the average price between 2015 and 2019.
“The decline in commodity prices is good for curbing inflation. It is also a concrete manifestation of inflation changes, indicating that inflationary pressures are easing.” Lian Ping pointed out that in the next stage, due to the low growth of the world economy, weakening demand, and geopolitical conflicts Prices may continue to decline, but from the perspective of the whole year of 2023, the global price level and inflation level will still be high.
Ayhan Khoss, World Bank Deputy Chief Economist and Director of the Prospects Group, said: “Falling commodity prices are helping to reduce headline global inflation. However, central banks need to remain vigilant because of a wide range of factors, including weaker than Expected oil supplies, heightened geopolitical tensions or adverse weather conditions could push prices higher, allowing renewed inflationary pressures.”
“The post-Ukrainian crisis phase of soaring food and energy prices is largely over due to slower growth, a mild winter and a reallocation of commodity trade,” said Indemi, World Bank Chief Economist and Senior Vice President for Development Economics. “But this offers little solace to consumers in many countries. In real terms, food prices are still among the highest in the past 50 years. Governments should refrain from imposing trade restrictions and should Use targeted income support programs instead of price controls to protect the poorest.”
Pang Ming, Chief Economist and Director of Research at Jones Lang LaSalle Greater China, pointed out that recent price fluctuations in commodity prices, especially bulk commodities and raw materials, mainly reflect supply-demand relations and liquidity issues in the short term. Even if commodity prices decline and stabilize this year and next, they will still be higher than the pre-COVID-19 level, which will continue to put pressure on the overall global inflation level.
Pang Ming said that from the perspective of long-term structural changes, both the center of global commodity prices and the center of long-term inflation may rise in the future. Second, over the past 10 years or so, the characteristics of oligopoly in the production and supply of bulk commodities and raw materials have gradually emerged around the world, and the supply brought about by the decline in related capital expenditures is relatively Limited, it will continue to increase the price rigidity of commodities in short supply; third, the green transformation trend of global low-carbon emission reduction means that the cost of carbon reduction will be reflected in the cost and price of various commodities on a global scale; fourth, developed countries The monetary policies of the economies have increased tolerance for inflation, so the response to potential inflationary pressures in the future may not be timely or sufficient; The impulsive impact of factors such as the slowdown in growth rate and the accumulation of risk aversion.
Food security needs attention
Among the various categories of commodities, the price trend of agricultural products, especially grain prices, deserves attention. For the nearly 350 million people around the world who face food insecurity, the impact of lower food prices will be negligible. While food prices are expected to fall by 8% in 2023, they will remain at the second-highest level since 1975, the report showed. Rising food prices have exacerbated food insecurity, disproportionately affecting the poor in many developing economies.
Data show that as of February this year, global food prices have risen by 20%, the highest level in the past 20 years. Fertilizer prices are also expected to fall by 37% in 2023, the largest annual drop since 1974 but still close to the highs reached during the 2008-2009 food crisis.
The Food and Agriculture Organization of the United Nations recently released the global food price index in April to 127.2 points, up 0.6% from the previous month, which was the first increase after 12 months. The rise in rice prices is extremely worrying as demand will increase as the economy recovers from a severe slowdown, giving food prices a boost, said Maximo Torrero, chief economist at the Food and Agriculture Organization of the United Nations. In addition, the black sea grain export agreement needs to be renewed to avoid a spike in wheat and corn prices.
Overall, the world‘s food shortage has not been significantly improved. “The impact of the food problem on developing countries, especially the poorer developing countries, is fatal. The crisis in Ukraine has brought great resistance to the global food supply. There are variables in the implementation of the Black Sea grain export agreement, and climate change is unpredictable. , have brought uncertainty to global food prices. If the food supply cannot be basically guaranteed, the food shortage in the least developed countries may reappear.” Lian Ping said. (Zhou Mingyang)
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责编：刘晗旭 ]