Commodity Markets: Insights from the First Half of 2024

In the first half of 2024, global commodity prices experienced notable fluctuations, significantly impacting international markets.

The Bloomberg Commodities Spot Index, which tracks 24 commodities, increased by 5.7%. Key contributors to this rise were coffee, silver, and oil, which provided substantial gains for investors.

Cocoa Price Dynamics

Cocoa prices showcased significant volatility, peaking at $10,884 on April 22 before dropping to $7,850 by July 5.

This price increase of 84% since April 2023, when it was $2,816, raised market concerns. Jonathan Parkman of Marex noted that this surge might reduce future demand.

Coffee’s Upward Trend

Coffee prices also surged, rising by 22.3% from $1.87 per pound on December 29 to $2.29 by July 5. Leading the Bloomberg Commodities Index, coffee demonstrated robust performance amid the tracked commodities.

Wheat and Corn Price Declines

Wheat and corn saw substantial declines, falling by 8.88% and 12.73%, respectively.

These declines followed high volatility in 2023 due to U.S. climatic conditions and the Russia-Ukraine conflict. Both commodities were the biggest losers in the Bloomberg Index.

Oil Market Movements

WTI crude oil prices increased by 16% from December 29 to July 5, with a 2% gain in the last week alone.

Brent and WTI prices are projected to average around $84 and $80 per barrel, respectively, in the latter half of 2024.

The International Energy Agency (IEA) forecasts slower global oil demand growth at 960,000 barrels per day, while supply is expected to reach over 102 million barrels per day.

Latin America is drawing significant oil investments, particularly in Brazil, Guyana, Argentina, and Trinidad and Tobago.

Copper’s Moderate Increase

Copper prices rose by 15.4% during this period. Chile, the top copper producer, saw production rebound after prices dropped from $10,889 to $9,515 and then rose to $9,800 per metric ton.

Credicorp Capital forecasts copper demand to double by 2035, potentially leading to a supply shortfall and higher prices.

China’s consumption, comprising 50% of global copper production, will significantly influence Latin America’s copper market.

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