Global commodity prices are expected to hit their lowest level in six years by 2026, dragged down by an oil glut, weak demand from China and sluggish global growth, the latest World Bank said. Commodity Markets Outlook.
The report forecasts prices will fall by about 7 percent in 2025 and 2026, marking the fourth consecutive year of decline. The drop is expected to bring relief to consumers with cheaper fuel and food, but it could affect national budgets for exports and erode farmers’ profits.
“Commodity markets help strengthen the global economy,” said the World Bank’s Gill. “Falling energy prices have contributed to the slowdown in global inflation. But this relaxation will not last.”
Energy prices led the slide, with Brent Crude expected to average $68 by 208 in 2020 and $60 a year earlier, less than last year. The bank said that it is the largest spread in the world and is now 65 percent above its last value in 2020, driven by the outflow of producers from OPEC + members and non-OPEC producers such as the United States.
Fuel demand is slowing as China’s consumption focuses on the rise of electric vehicles. The World Bank expects overall energy prices to fall 12 percent in 2025 and another 10 percent in 2026.
Natural gas markets will see mixed trends. Prices are set to rise 11 percent in the United States by 2026 but fall in Europe and Japan as supply expands.
Food prices are also correcting, with grains, rice and sheat reduced by strong harvests and better supply conditions. The bank expects global food prices to fall by 6.1 percent in 2025 and remain roughly flat the following year.
However, the cost of fertilizer can make the margins of farmers. Prices predict a concentration of 21 percent this year before slowing slightly in 2026, reflecting high input costs, trade restrictions and export curbs in the major producing countries China and Belarus.
While most commodities are weak, investors are moving into precious metals. Gold prices are projected to rise 42 percent by 2025 and another 5 percent by 2026, nearly double their pre-pandemic rate. Silver is also expected to hit Record Highs, Buy with Safe-Haven for and its use with renewable energy technology.
The Bank pointed out that the Surge in central bank purchases and geopolitical uncertainty, including conflicts and organizations that have developed the needs of defense equipment.
Falling food and energy prices are expected to help global inflation, cut 0.2 percent from oil prices to create inflation, redirect money to health, education and infrastructure.
However, the report cautioned that the outlook is soft. An expected, sustained reduction in oil prices or a further increase in oil production could push prices lower. On the other hand, new conflicts, sanctions or bad weather linked to La Niña could cause new spikes.
“Low oil prices provide a timely opportunity for economic development to move forward with fiscal reforms that promote growth and create jobs,” said Ayhan Kose, the country’s senior deputy economist.
