Overview of Commodity Markets: Recent Developments and Outlook

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This document provides insights into the recent developments, outlook, and risks in commodity markets. It covers global economic prospects, commodity prices pre- and post-COVID, longer-term perspective, oil prices since 2011, and half a century of real oil prices. The data and analysis offer a comprehensive view of the commodity market landscape, highlighting key trends and factors shaping the industry.

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Commodity Markets Outlook: Recent Developments, Outlook, and Risks* 1

Outline 2

Global economic prospects and macroeconomic conditions Global growth Macroeconomic conditions Percent US$ index Percent 6 126 -0.20 AEs EMDEs World 5.0 4 4.5 4.3 4.2 4.1 -0.40 3.8 3.6 3.5 122 3.3 2 2.3 2.3 2.2 1.7 1.6 -0.60 U.S. dollar [left] 0 118 -0.80 -2 -2.6 114 -1.00 -4 -5.4 U.S. T-bill [right] -6 110 -1.20 2015 2016 2017 2018 2019 2020E 2021F 2022F Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Source: World Bank, Global Economic Prospects (January 2021 edition) and Federal Reserve Bank of St. Louis. Note: AEs stands for Advanced Economies and EMDEs stands for Emerging Markets and Developing Economies. The US dollar index is a broad trade weighted index for goods and services (DTWEXBGS). The U.S. T-bill is the 10-Year Treasury inflation-indexed security, constant maturity, not seasonally adjusted (DFII10). Last observation is April 16, 2021. 3

Commodity prices: Pre- and post-COVID US$ index, nominal terms, 2010 = 100 120 COVID-19 100 Agriculture Metals 80 Energy 60 40 20 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 Source: World Bank Note: The shaded area, COVID-19, corresponds to January 2020 March 2021 (last observation). 4

Commodity prices: Longer term perspective US$ index, nominal terms, 2010 = 100 160 COVID-19 140 Energy 120 100 Agriculture 80 Metals 60 40 20 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Source: World Bank Note: The shaded area corresponds to February 2020 October 2020 (last observation). 5

Oil prices since 2011: A tale of two averages US$/bbl, nominal 120 $104/bbl 100 80 60 $53/bbl 40 20 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Source: World Bank Note: The dotted lines represent averages during January 2011 - August 2014 and January 2015 - April 2021 (as of April 21). 6

Half a century of real oil prices US$/bbl, deflated by U.S. CPI (Jan 2019 = 100) 160 120 80 1970-2021 average: $56/bbl 40 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Source: World Bank. Note: Price represents the average Brent, Dubai, and WTI. Last observation is March 2021. 7

Oil demand conditions and forecasts OECD demand growth by type of fuel Evolution of demand forecasts for 2021 Percent Index, 2019Q4 = 100 100 8 IEA OPEC EIA 80 7 60 6 40 Diesel Jet Gasoline 20 5 2019Q4 2020Q2 2020Q4 2021Q2 2021Q4 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 Source: EIA, IEA, OPEC, and World Bank. Notes: 2021Q2 - Q4 are forecasts (left panel). Last observation is April (right panel). 8

Oil supply conditions OPEC+ production cuts OPEC+ spare capacity Percent of global production Percent of global production 4 14 Saudi Arabia Russia Other OPEC Other OPEC+ 2 12 0 10 -2 8 -4 6 -6 4 -8 2 Saudi Arabia Russia Other OPEC Other OPEC+ -10 0 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 Source: EIA, OPEC, World Bank. Notes: Production cuts are calculated as change in production relative to January 2020 as a share of global production in 2019. Other OPEC includes all current OPEC countries except Saudi Arabia, Iran, Libya, and Venezuela the three latter are exempt from production cuts. Other OPEC+ includes Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Oman, South Sudan, and Sudan. Spare production capacity is the difference between the country s maximum output since January 2018 and its current production level. 9

Oil supply conditions, cont. Oil production, select OPEC countries Rig count in the Permian basin Mb/d Count bbl/d 5 600 1,400 Rig count [left] Production per rig [right] Iran Libya Venezuela 1,200 500 4 1,000 400 3 800 300 600 2 200 400 1 100 200 0 0 Jan-07 - Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21 Source: Baker Hughes, EIA, OPEC, World Bank. Notes: Oil rig count and oil production per rig in the Permian basin (right panel). 10

Metals prices recovered as soon as PMI reversed course US$ index, nominal terms, 2010 = 100 Index 55 110 Global manufacturing PMI index [left] 52 100 49 90 46 80 Base metals [right] 43 70 40 COVID-19 37 60 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 Jan-21 Source: Haver Analytics, World Bank. Note: Last observation is March 2021. The base metals price index includes aluminum, copper, lead, nickel, tin, and zinc. 11

China dominates metal consumption Metal consumption growth Global metal consumption mmt Percent, y/y 30 30 Rest of the World China OECD China Other non-OECD 25 20 20 10 0 15 -10 10 -20 5 -30 0 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 1995 1999 2003 2007 2011 2015 2019 Source: World Bank, World Bureau of Metal Statistics, US Geological Survey, British Geological Survey. Notes: Last observation is 2019 (left panel), January 2021 (right panel). 12

Precious metals prices: Diverging trends Precious metals prices Gold prices and interest rates US$/toz Percent US$/toz US$/toz 2,000 2.00 1,300 2,000 1.50 1,200 Gold price [left] 1,800 1,800 1.00 1,100 Platinum [left] 1,600 1,600 0.50 1,000 - 1,400 1,400 900 (0.50) 1,200 1,200 800 (1.00) Gold [right] Interest rate [right] COVID-19 COVID-19 1,000 (1.50) 700 1,000 2010 2012 2014 2016 2018 2020 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Source: Federal Reserve of St. Louis, World Bank. Note: Interest rate is the 10-year U.S. Treasury inflation-indexed security with constant maturity, not seasonally adjusted (DFII10). Last observation is March 2021. 13

Agricultural prices: Spiked following 5 years of stability US$ index, nominal, 2010 = 100 140 COVID-19 Food 120 Raw materials 100 80 Beverages 60 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Source: World Bank. Note: Last observation is March 2021. 14

The U.S. dollar and global grain supply/demand conditions Aggregate S/U ratio of 12 commodities Agricultural prices and the U.S. dollar US$ index, nominal, 2010 = 100 Index, 2006 =100 S/U Ratio 105 126 0.35 100 0.30 122 95 0.25 118 90 0.20 Agriculture price index [left] US dollar [right] 114 85 0.15 80 110 0.10 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 2000 2004 2008 2012 2016 2020 Source: Federal Reserve Bank of St. Louis, U.S. Department of Agriculture (April 9, 2021 update), and World Bank. Notes: Last observation is March 2021 (left panel). The stocks-to-use ratio (S/U) comprises of 12 grains and edible oils, aggregated according to calorific content. Years denote crop seasons (i.e., 2020 refers to the 2020-21 crop season). 15

Food supply growth Grains Edible oils mmt, annual change mmt, annual change 250 15 Maize Wheat Rice 1990-2020 average Palm oil Rapeseed oil 1990-2020 average Soybean oil Others 200 10 150 100 5 50 0 0 -50 -5 2005 2007 2009 2011 2013 2015 2017 2019 2005 2007 2009 2011 2013 2015 2017 2019 Source: U.S. Department of Agriculture (April 9, 2021 update). Note: Years represent crop seasons (for example, 2019 refers to 2019-20). Supply is the sum of beginning stocks and production. 16