What Does 2024 Look Like For Commodities?

What does 2024 look like for commodities?

What is the forecast for global commodity markets in 2024?

Written by

The Grocer


15 December 2023

The world moves fast. Stay ahead.
Subscribe to our newsletter for business transformation news delivered straight to your inbox.
Thank you!You've been successfully subscribed.

Share this post


Buyers will be hoping for the ‘semblance of normality’ experts predict – but El Niño and other costs mean it won’t be simple.

After three turbulent years punctuated by war, adverse weather, and input and energy cost rises, it looks as if global commodity markets are finally about to catch a break in 2024. Price inflation and supply volatility is set to ease next year, according to agrifood experts at Rabobank – particularly on sugar, corn, coffee and soybeans.

Carlos Mera, the bank’s head of agri-commodities, says producers are “eyeing 2024 as the return to a semblance of normality”. A slowdown in input costs, notably for energy and fertiliser, means sectors that rely heavily on those raw commodities and high energy consumption – like bakery, dairy and animal protein producers – are set to be the biggest winners, Mera says.

“It won’t be plain sailing but the more positive outlook for the majority of agri-commodities should lead to relief for buyers.”

So what factors are driving a more positive outlook? And what are the known knowns that might put a dampener on the situation?

El Niño

While last year’s main driver of food prices was energy inflation, this year’s villain has undoubtedly been climate change, which was responsible for one third of food inflation in the UK, according to a recent report from the Energy & Climate Intelligence Unit (ECIU).

Its effects are likely to be felt for some time to come in 2024, further disrupting crops. The phenomenon, which started last September and can last anywhere between nine and 12 months, affects global temperatures and precipitation, which in turn has a major effect on crop growth, quality and yield – and subsequently, on food prices.

Indonesian palm oil and Australian wheat, for instance will be adversely affected by dryness. But El Niño’s impact is not “entirely negative”, explains Kumar Amit, senior specialist at The Smart Cube. “In some regions, the weather event can be a boon, boosting crop yield and leading to a strong harvest – this is evident in Brazil, where wetter conditions have led to a bumper harvest of both corn and wheat.”

In 2024, world coarse grain demand will rise 2% year on year and stocks nearly 4%, Rabobank predicts. However, it’s too early to tell what exactly will happen in the second half of the year as uncertainty will always govern when it comes to weather, notes The Retail Mind director Ged Futter.

“Climate is having a far bigger impact on global supply, so saying that a commodity is coming down – it might for now, but 12 months is a long time, so who knows what the impact will be on next year’s harvest? We just don’t know.”

Futter also notes spot price changes don’t necessarily determine consumer prices because it all boils down to contract durations, as well an array of other inflationary pressures businesses face. “A commodity market tracks the overall price, not the prices individual companies paid when they bought it, and that has a more significant impact on whether prices then come down on the shelf.”


While 2023 brought a much-needed fall in energy prices from their record highs the year before, experts are more cautious about next year’s picture. Oil prices are set to increase next year as OPEC and Russia “have shown a willingness to cut production to buoy prices and cause economic harm to their geopolitical rivals”, Rabobank’s 2024 commodities outlook report points out, in addition to lower output from the US.

Joe DeLaura, global energy strategist at Rabobank, warns natural gas prices will also “not return to the levels seen two or three years ago” because European buyers that were previously reliant on Russian supplies were forced to switch to more expensive producers such as Qatar, Norway and the US.

A broadening of the conflict in the heavy oil-producing Middle East region in the near term could also have “major repercussions for global commodity prices and push economies into a deeper economic contraction”, Rabobank’s report warns.

Geopolitical tensions also remain in Europe. Even though the ripple effects of Russia’s invasion of Ukraine on energy and fertiliser markets have diminished over the past year, crucial exports from the war-torn region – especially grains including wheat, maize and barley – have proven “significantly more expensive than when the Black Sea grain deal was in place, which risks pushing up grain prices again”, FDF boss Karen Betts recently warned.

Supply Chain Costs

There are two key pieces of legislation that could further affect commodity trading costs next year – the EU’s anti-deforestation law, which rolled out this June, and the UK’s upcoming amendment to the Environment Act 2021, announced at COP28.

Both require traders of forest-risk commodities such as cattle, sugar, cocoa, coffee, and palm oil to strengthen their due diligence processes and produce extra paperwork proving their products are not linked to illegal deforestation, which many suppliers have already warned will increase their costs.

Those across the supply chain have also flagged the Panama Canal drought as a major concern. Record-low water levels in the busy international shipping route have forced local authorities to slash the number of vessels allowed to make the 40-mile crossing connecting the Atlantic and Pacific Oceans from 32 ships a day in July to 22 per day in December.

The Panama Canal Authority has warned booking slots will fall to 20 per day from 1 January 2024, and then again to 18 per day from 1 February.

This will cause significant disruption considering the canal handles 5% of the world's trade.

Gerry Power, TMX UK Head of Country

If the issue persists, or indeed worsens due to El Niño’s dry spells in the area, shipping costs could increase.

Not all bad news

Lower consumer demand has pushed freight costs down this year, with Freightos data from October showing the rates for shipping a 40 ft container from Asia to the US west coast have dropped by over 80% since the end of April 2022.

Packaging costs have also slumped this year on falling energy costs, a Mintec Q3 2023 glass survey showing prices for soft drink and food container bottles across Europe continued to drop from the previous quarter. Meanwhile, the EU manufacture of glass and glass products index has been trending down since August 2022.

Rabobank’s Mera maintains that even though “now is not the time to toast a recovery”, the outlook for inflation in agricultural commodities is “far more positive than in previous years”.

But Futter is more cautious: “Over the past four years we’ve seen significant ‘black swan’ events that no one was predicting, which showed just how volatile the markets are. You always have to price in risk volatility because there is no stability in any of the global markets at the moment.”

This article was written by Maria Gonçalves and originally published by The Grocer on December 15, 2023.

The world moves fast. Stay ahead.
Subscribe to our newsletter for business transformation news delivered straight to your inbox.
Thank you!You've been successfully subscribed.