The global commodities market has experienced a year of relative calm, with minimal fluctuations in prices barring a few exceptions driven by policy changesThis subdued environment can be attributed to several factors including sluggish global economic growth, weak demand, and ongoing geopolitical tensions, particularly in the Middle EastThe prevailing sentiment among market participants is one of caution, as the impacts of geopolitical conflicts, previously seen as potential drivers of increased prices due to supply fears, have largely been absorbed by the market.

Looking ahead, several uncertainties are shaping future market trends, notably shifts in energy trade policies stemming from the newly elected US government, and the long-term prospects for global green developmentThese variables hold significant sway over the commodities landscape, warranting focused attention from analysts and investors alike.

The International Monetary Fund (IMF) has reported that the commodity price index showed an increase of only 0.8% from August of last year to this August, indicating a stable pricing environment overall

Energy prices, such as crude oil, saw index declines of around 5%, while agricultural commodities like food indices dropped by 3.07%. In contrast, industrial metals, precious metals, and transition metals for energy all experienced rises, with gold and other precious metals emerging as the clear beneficiaries of this year’s market dynamics.

Crude oil prices oscillated primarily between $70 and $80 per barrel for most of the year, however, they were also subject to substantial fluctuations due to intense geopolitical tensions that saw prices spike above $90 before retracingOPEC and non-OPEC oil producers have effectively managed to keep oil prices under control through production cuts, with speculations predicting a closing price around $70 per barrel by year-endObserving this year’s oil price movements reveals critical characteristics: the influence of geopolitical conflicts on oil prices has diminished over time, signalling a market increasingly confident in the stability of the global energy supply chain

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Moreover, flagging global economic conditions have severely dampened oil demand growth, creating a pessimistic market outlookThe reluctance of investment from speculators further exacerbates this sentimentFurthermore, the balancing act between supply and demand remains tenuous, as OPEC continues to extend production limits while US oil production steadily risesIn the larger landscape, the surge in renewable energy projects and electric vehicle (EV) sales is beginning to exert a structural influence on the international crude oil market.

This year, the basic metals market has displayed a bifurcated pattern, particularly with copper and aluminum pricesThroughout the year, copper has demonstrated robust growth, climbing from $8,100 per ton at the start to over $11,100 per ton, with end-year forecasts suggesting a close above $9,000 per tonThis uptrend has been largely propelled by explosive growth within the electric vehicle sector

On the contrary, aluminum prices struggled due to overcapacity and sluggish demand, fluctuating between $2,200 and $2,600 per tonNickel exhibited a volatile trajectory, experiencing a significant peak in May before plummeting, with predictions indicating a wrap-up price slightly below its initial opening levelThe market dynamics surrounding nickel are heavily influenced by Indonesia’s export policies, as it serves as one of the world's leading nickel producers.

In terms of precious metals, the upward trend of gold and silver prices is expected to persist into 2024, with gold prices soaring from $2,060 per ounce at the beginning of the year to a high of $2,801 by late October—representing a notable appreciationThis surge can primarily be attributed to geopolitical risks and inflation pressures driving substantial investment into the gold market as a hedge against value erosion

Projections suggest a slight fluctuation in precious metal prices next year, but overall investment demand is anticipated to support their long-term value.

Turning to the agricultural sector, the Food and Agriculture Organization (FAO) has projected in its December report that the global grain production forecast for this year has been adjusted to reach 2.841 billion tons, marking the second highest level on recordIncreases in corn production from key players such as Argentina, Brazil, and Turkey, along with promising wheat harvests in various Asian countries, underpin this forecastConsequently, the FAO anticipates that global food supply remains plentiful this year, with record-high projections for rice and oilseed outputsYet, challenges persist, as extreme weather, geopolitical strife, and abrupt policy shifts could lead to disruptions in global food supply and demand balance, exacerbating food insecurity and rising import costs significantly.

Grain prices have shown a mostly stable yet declining trend for corn, soybeans, and wheat

However, crucial issues loom, particularly the rising logistics costs impacted by regional conflicts and drought situations affecting global shipping routesThe FAO estimates that global food import costs will exceed $2 trillion this year, marking a 2.5% increase from the previous year, which poses severe challenges for developing countries reliant on food imports.

As we set our sights on the trajectory of the international commodities market through 2025, assessments from prominent global institutions offer an optimistic outlook.

Firstly, economic growth rates are predicted to maintain a positive trajectoryThe IMF projects a global economic growth rate of approximately 3.2% for the next two years, while the OECD estimates a rate of 3.3% for 2025—slightly ahead of the 3.2% projected for 2024. Additionally, the World Bank’s Global Economic Prospects suggests a 2.6% growth in 2024, with an uptick to 2.7% anticipated as trade and investment levels increase next year

Despite signs of recovery, it remains essential to acknowledge the potential impediments posed by ongoing geopolitical tensions and the uncertain trade policies of the new US government, which may detrimentally impact the security and stability of global supply chains.

In terms of demand, there appears to be potential for recoveryThe global economic rebound is making a dent in previously lackluster commodity demand expectationsNotably, China has emerged as the principal demand driver for commodities, which significantly affects pricing, with growth predictions indicating that China's economy will achieve its targets by 2025, thereby buoying energy and metal demandGlobal demand for metals associated with energy transition is expected to surge significantly in response to recovery efforts across major economies.

On the supply side, stability is projected to continueFor instance, in the oil and gas sector, the new US administration is likely to ease exploration and extraction approvals significantly, consequently driving a surge in US oil and gas investments and production

Nonetheless, geopolitical risks may continue to disrupt commodity suppliesMoreover, frequent extreme weather events could pose considerable risks to energy supply security, primarily affecting European energy resources.

Delving into specific markets now, oil demand growth is anticipated to continue its declineThe International Energy Agency's December report projects that global oil demand will see an increase of only 840,000 barrels per day in 2024, a downward revision from previous estimates of 920,000 barrels per daySimilarly, OPEC has consecutively reduced its oil demand growth projections throughout the yearGoldman Sachs forecasts that the average international oil price is likely to hover around $76 per barrel next year, operating within a band of $70 to $85.

In the natural gas market, price fluctuations are expected to stabilize, with the US Energy Information Administration indicating that various factors will affect the global gas market in 2025, revealing pronounced regional price disparities

The liquefied natural gas (LNG) supply and demand are set to rise further, with European markets expected to continue importing significant volumes of US LNG, alongside an increase in demand from the Asia-Pacific regionAs a transitional energy source, natural gas consumption could peak by 2030, with the supply-demand balance starting to shift as new LNG projects come online between 2025 and beyond.

Meanwhile, the global metal market is poised to experience continued downward price pressureAnalysts predict that the new energy sector will undergo adjustments next year, leading to a slowdown in the demand for critical metalsCompared to this year's elevated copper prices due to demand, we can expect a contraction in growth next year, stabilizing prices insteadFurthermore, growth in electric vehicles is forecasted to face hurdles, resulting in a deceleration in global sales and a significant curtailment in demand for essential minerals like lithium and nickel

Supply excess issues surrounding iron ore are expected to expand markedly into 2024, with market prices projected to remain under pressure heading into 2025.

Finally, the global food market will face an array of opportunities and challengesProduction could be negatively impacted by increasingly unpredictable extreme weather events, combined with surging costs associated with energy and inputs, leading to anticipated declines in wheat, corn, and sugar yields next yearHowever, rice production in the Asian region is expected to riseConcurrently, growing consumption in developing nations suggests increases in production for meat, dairy, and fish.

Despite these prospects, food security issues are likely to persist as a significant concernInflation remains a primary driver, contributing to escalating food prices while maintaining high production costs due to fertilizer and energy prices, which present a substantial burden for many developing nations reliant on food imports