Key Interpretation of Commodity Price Analysis

According to the agency's calculation, commodity price risk will rank sixth in the global risk ranking in 2025 and is expected to climb to fourth place by 2028. At present, the geopolitical situation and climate disturbances have exacerbated supply chain pressure, policy adjustments and extreme weather events have combined to affect commodity prices, while also triggering tight supplies of raw materials.

Data from this year's Global Risk Management Survey show that commodity prices and the availability of raw materials remain core variables shaping the global business landscape. While some commodity prices have retreated since the peak of the epidemic, others have broken through historical highs; and most commodity prices remain above pre-2020 levels due to continued uncertainty and volatile demand.

There is a growing risk of companies coping with raw material shortages and market uncertainty. Market dynamics, labour shortages and climate-related disturbances affecting the risk landscape are continuing to impact supply chain stability. Extreme weather events not only exacerbate raw material shortages, but also drive up costs across multiple industries - including food, agricultural beverages, automotive, pharmaceuticals and life sciences - fully exposing the fragility of global supply networks. At the same time, tariff increases on some commodities directly increase production costs, putting significant pressure on the competitiveness of industries such as manufacturing and construction.

The commodity categories affected are as follows

Energy: In mid-2024, a combination of geopolitical tensions and production cuts drove crude oil and refined products prices sharply higher. Currently, the World Bank forecasts a downward trend in crude oil prices between 2025 and 2026, supported by abundant supply and slowing demand. However, it should be noted that weather factors and escalating geopolitical risks continue to make the market highly sensitive, and volatility is expected to continue.

Metals and minerals: Persistent shortages of rare earths, copper and polysilicon are weighing on some industries - for example, directly driving up the production costs of wind turbines and solar panels. Prices of metals such as cobalt, nickel and tungsten have fluctuated due to technological developments. In contrast, in 2024, there will be a phased oversupply of lithium, cobalt and nickel, triggering price declines and capacity adjustments.

Agriculture and livestock: Prices of agricultural and livestock products remained highly volatile due to supply chain disruptions, fluctuations in demand for biofuels and weather conditions. Despite some price declines in some categories, food security issues remain prominent in vulnerable areas. Losses and preparedness show that commodity price volatility and raw material shortages are escalating. While 60 per cent of respondents said they had a response plan in place, nearly half of institutions still suffered actual losses - only 17 per cent completed a quantitative risk assessment, meaning most remain exposed to market shocks.

Changes in commodity markets have severely damaged companies

The World Bank's latest "Commodity Market Outlook" points out that global commodity prices are expected to fall by 12% in 2025 and another 5% in 2026. After the changes in the international situation in 2022, the boom cycle driven by the rebound of the global economy is coming to an end, but the actual development is different. The prices of gold, silver, copper and other commodities have risen one after another. In addition to industrial demand, it also carries the function of liquidity. In commodity investment, it is necessary to continuously track the category and think twice about the logic of funds. For investors who pay attention to relevant markets,Ava ForexAs a financial services platform, its analytical tools help users better track commodity prices.

In the 12 months prior to the survey, 47 per cent of respondents suffered actual losses due to such risks. Sixty per cent said their organisations had established special project response plans. Liquidity levels, the size of Working Funds and access to finance remain core elements of effective risk management strategies to address commodity price risks and raw material shortages.

coping strategy

When investing in commodities, fundamental analysis may be a better option. Focusing on the reasons for changes in raw material inventories, even sometimes affected by rising global temperatures and frequent extreme weather events, can pose risks to the short-term supply of commodities. At the same time, observe upstream and downstream business disruptions, supply chain threats and risk assessments, or gain a panoramic view of the potential financial impact of a company.

For technical analysis, contracts such as individual commodities may deviate from the technical trend due to large funds or the main individual behavior. The risk of commodity prices or raw material shortages is still rising this year, and the price of commodity markets is expected to continue to fluctuate.