Most commodity prices will drop substantially in 2020: World Bank 

#GS3 #Economy  

Energy prices may average at 40% lower than in 2019 

  • COVID-19 is projected to bring most commodity prices down substantially in 2020 in ‘April Commodity Markets Outlook’.  
  • Prices of energy and metals have been worst hit. While there has been only a moderate impact on the agricultural commodities outlook, supply chain disruptions and export restrictions and stockpiling by governments have raised food security concerns.  
  • The outlooks are “exceptionally uncertain” and depend on the severity and duration of the pandemic and when mitigation measures are unwound.   
  • Energy prices, which fell 18.4% quarter-on-quarter in 2020 Q1, are expected to average at 40% lower in 2020 than in 2019.  
  • With crude benchmarks trading at below zero earlier this week, the bank projects oil prices to average at $35 per barrel in 2020.  
  • This reflects a historically large expected drop in oil demand of 10%. Non-energy prices are expected to fall 5% in 2020 and stabilise next year. Metal prices are expected to fall 13% and rebound modestly next year.  
  • Agricultural prices are likely to stay broadly stable in 2020 because of relatively stable demand and all-time high levels of staple production and stock.  
  • However, supply chain disruptions and trade policy announcements and stockpiling could create food shortages.  
  • Policymakers must resist the urge to impose trade restrictions and actions that put food security at risk, as the poor would be hit the hardest.  
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