The Covid-19 pandemic hit commodity markets hard, but the impact was not uniform, in contrast to the global recession of 2008/09 when all commodities fell. Overall, there is a clear rebound in the third quarter but for some materials, the level remains below that before the coronavirus, in particular for energy products indicates the half-yearly edition of the Commodity Markets Outlook of the World Bank, published at the end of of the month of October.

Thus, energy prices rebounded by a third in the third quarter of 2020 after their sharp decline in the second quarter of 2020, but remain almost a third below their pre-pandemic levels. Crude oil prices nearly doubled to average $41 a barrel in September from a low of $21 in April. Natural gas prices also rose sharply in the third quarter of 2020, while coal prices were broadly flat.

Excluding energy products, prices rose 10% in the third quarter of 2020, with increases in almost all commodities. So with the strong recovery in China and some resistance in advanced economies, the metals and minerals price index has risen 20% and most metal prices are above their pandemic levels. As for the prices of agricultural products, they gained 6% in the third quarter, but with a divergence between globally stable cereal prices and the rise in the prices of other agricultural products.

Agricultural prices up compared to 2019

Today, agricultural prices are 6% higher than a year ago and for the majority are expected to rise further by the end of the year with supply shortages of certain oils and flours, a strong demand for commodities and a depreciation of the US dollar, says the World Bank. It estimates that agricultural prices will gain 3% over the year.

While the World Bank's cereal price index (wheat, corn, rice) is generally stable, the oil and meal index is 17% higher than in the 3rd quarter of 2019, with a jump in particular 22% in soybean and palm oil prices in Q3 2020, reflecting production shortfalls last season. However, the World Bank observes that the prospects for edible oil production for 2020/21 (October-September) are more promising with a 1.7% increase in the production of the 10 main oils whose growth will be mainly driven by the soy (+4.5%) and palm oil (+3%).

Coffee and tea on the rise, cocoa stable

Most beverage commodity prices - cocoa, coffee and tea - have posted sizable gains since July, but have recently lost momentum on the prospect of higher-than-expected production for the current season. The World Bank's beverage price index rose 8% in the third quarter of 2020 and is almost 11% higher than a year ago. The increase was driven by coffee and tea prices, although the former has weakened recently. The index is expected to show a moderate gain in 2021, after an expected increase of nearly 7% in the current year. Arabica and Robusta coffee prices have followed similar trajectories over the past few months. A moderate decline in the 2nd quarter of 2020 due to the pandemic was followed by a recovery in the 3rd quarter. Nevertheless, prices have weakened in recent weeks with slightly lower global consumption in 2020/21 while global production, on the other hand, is expected to grow by more than 4% in 2020-2021. The World Bank estimates that Arabica prices will stabilize in 2021, after an estimated gain of 16% in 2020. As for Robusta, it is expected to gain 3% in 2021, after falling 7.5% in 2020.

For cocoa, prices have remained broadly stable over the past six months, after falling

down 14% in March due to concerns about the impact of Covid-19 on demand. With the recovery in demand for cocoa, prices are expected to increase by 1.6% in 2021, after an expected increase of 2.5% in 2020. Finally, tea prices have followed various trajectories with a rise in the market at auctions in Kolkata (India) following strict confinement but a drop in Mombasa (Kenya) due to an abundant supply. With the resumption of tea supplies in India, tea prices are expected to remain broadly stable in 2021, following a forecast rise of 7.4% in 2020.

Cotton and rubber, after a sharp fall, a modest recovery

The raw materials price index (rubber - cotton) rose by more than 6% in the 3rd quarter, driven by a strong rebound in natural rubber prices. The index is 3% higher than in the third quarter of 2019. Commodity prices are expected to register a gain of 1.6% in 2021, after an estimated marginal decline this year.

After a 20% drop between January and April, cotton prices have recovered but remain 4% lower compared to the 3rd quarter of 2019. Despite a drop in supply estimated at 5% in 2020/21 and a 6% recovery in demand, cotton prices should only increase by 3% in 2021 given the high level of stocks (9 million tonnes). For 2020, the World Bank expects a 10% drop in prices.Rubber prices have followed the same trajectory as those of cotton with the collapse in demand following the closure of many tire manufacturing plants and then to fall. to resume. After an anticipated marginal decline in 2020, rubber prices are expected to gain more than 3% in 2021.

For 2021, the World Bank estimates that oil prices are expected to rise very gradually from current levels and average $44 per barrel in 2021, from an estimated $41 in 2020. Metals and agricultural commodity prices are expected to register modest gains by 2% and 1% respectively in 2021. For the World Bank, the main risk to the price forecast is the duration of the pandemic, including the risk of a second wave intensifying in the northern hemisphere, and the speed at which a vaccine is developed and distributed.