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Informist, Friday, Dec. 13, 2024

 

MUMBAI – Prices of most commodities globally will remain subdued in 2025, but there could also be some products showing an increase in prices, Madan Sabnavis, chief economist at Bank of Baroda, said in a report Friday. "This will mean that central banks may have less worries on inflation and could accordingly frame their approaches to monetary policy," he said.

 

The economist said the energy price index is projected to fall 6% in 2025. The forecast assumes that there is no prolonged additional escalation of ongoing armed conflicts, global economic growth remains stable, and oil supply from non-Organization of the Petroleum Exporting Countries and allies steadily increases.

 

The Brent crude oil price is projected to average $73 per barrel in 2025 and $72 per barrel in 2026. As of November, Brent crude oil prices fell nearly 11% from the same period last year.

 

"Global oil supply is expected to reach approximately 105 million barrels per day in 2025, up by 2 million barrels per day from 2024," according to the report. Most of this increase is anticipated to occur in Brazil, Canada, Guyana, and the US, with production from OPEC and allies edging up slightly.

 

"Demand growth in China and India comprises nearly half of the envisioned increase in 2025, while consumption in advanced economies is set to decline marginally," the report said.

 

Moving to agri commodities, Sabnavis said prices may fall 4% in 2025 due to increasing supplies amid favourable weather conditions, "with little change anticipated in 2026". After a 5?ll on a yearly basis in November, prices of wheat globally are forecast to decrease 2% more in 2025, and those of maize are likely to see a 1% downside in 2025. As of November, global maize prices fell nearly 4% compared to the same period in 2023.

 

Rice prices are seen falling 11% in 2025 and 2% in 2026 as global output reaches a new high in the 2024-25 season and India eases its rice export restrictions. "Ample monsoon rains have expanded rice sowing in India for the 2024-25 season, while the probable emergence of La Nina weather conditions, which typically bring more rainfall to South Asia, is expected to improve yields and boost inventories," he said.  

 

OILS, MEALS

The oil and meals price index is forecast to soften a further 4% in 2025, driven by favourable global oilseed supplies, before flattening out in 2026, the economist said. Soybean prices are projected to decrease 6% in 2025, with global production projected to rise 9% in the 2024-25 season to reach a new record.

 

Soyoil prices are expected to weaken only 1% next year despite a sharp rise in production in 2024-25 season. However, in 2026, prices are seen increasing 3%, as crop losses in sunflower seed and rapeseed in the European Union and the Black Sea region reduce the availability of alternative oils. Soymeal prices are expected to decline 18% in 2024, followed by a 2% drop in 2025, before recovering by 2% in 2026, in line with expected movements in soybean processing, according to the report.

 

However, prices of palm oil are expected to rise 4% in the current year because of lower production in Indonesia and crop losses in Central America. But the forecast says prices of palm oil are seen down 7% and 1% in 2025 and 2026, respectively, as global production is likely to recover. 

 

METAL INDEX

The metals price index is projected to drift slightly lower over 2025-26. After rising 6% this year, base metal prices are forecast to hold steady next year before softening by 3% in 2026, according to the report. This reflects only moderate expected growth of industrial activity in major economies, particularly China.

 

Copper prices are forecast to edge up almost 1% in 2025, supported by steady demand growth. In 2026, copper prices are projected to fall 9% owing to stronger supply growth.

 

On the other hand, precious metal prices are expected to remain stable next year and edge down in 2026, after a 21% increase in 2024. Robust safe-haven demand for gold is expected to be sustained in the near term, the report said.

 

"However, demand from central banks and jewellery production, which together account for about two-thirds of global gold demand, is likely to ease over the forecast horizon due to record high prices," it added. End

 

 

Reported by J. Navya Sruthi

Edited by Tanima Banerjee

 

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