SINGAPORE, April 20 (Reuters) – Global commodity prices are expected to stay firm around current levels in 2021 after recovering in the first quarter buoyed by strong economic growth, the World Bank said on Tuesday.
Energy prices are expected to average more than one-third higher this year than 2020, with oil averaging $56 a barrel, it said. Prices should rise to $60 a barrel in 2022, “broadly in line with their 2017-19 average.”
Metals are expected to climb 30% and agricultural markets are forecast to rise nearly 14%.
Still, the World Bank said its outlook is heavily dependent on progress in containing the COVID-19 pandemic as well as policy support measures in advanced economies.
“Global growth has been stronger than expected so far and vaccination campaigns are underway, and these trends have buoyed commodity prices. However, the durability of the recovery is highly uncertain,” said Ayhan Kose, World Bank group acting vice president for equitable growth, finance and institutions, and director of the prospects group.
“Emerging market and developing economies, both commodity exporters and importers, should strengthen their short-term resilience and prepare for the possibility of growth losing momentum.”
Crude oil has bounced back from all-time lows reached during the initial months of the pandemic. A rapid global economic recovery and continued production cuts by the Organization of the Petroleum Exporting Countries and partners have supported prices, it said.
Brent crude and U.S. West Texas Intermediate crude have climbed more than 30% in 2021.
Metal prices are likely to give up some of this year’s gains as stimulus-driven growth fades in 2022.
Copper prices are projected to average 38% higher this year on strong construction and consumer goods demand.
“However, they are expected to ease in 2022 as new supplies materialize.”
A faster-than expected withdrawal of stimulus by some major emerging market economies could pose a downside risk to metal prices, but higher U.S. infrastructure spending could support some metals, including aluminum, copper and iron ore.
Agricultural markets have rallied on strong Chinese demand and production issues in South America, even though most global food commodity markets remain adequately supplied by historical standards, the World Bank said.
Benchmark Chicago corn and soybeans are trading close to multi-year highs, with prices lifted by food security worries and adverse weather in Brazil.
Food inflation in Latin America, the Middle East and Africa averaged nearly 9% in January-February 2021, and there is risk of higher price inflation if the recent spikes in world food prices “transmit into domestic markets,” it added. (Reporting by Naveen Thukral; Editing by Rashmi Aich)
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