After three years of extreme volatility, commodities prices are set to broadly stabilise in 2024.

According to the Economist Intelligence Unit Commodities Outlook 2024, this apparent stasis may come as a surprise given the many geopolitical headwinds buffeting the global economy at the moment.

These range from adverse weather conditions to escalating conflict in the Middle East and rocketing freight rates owing to disrupted shipping routes through the Suez and Panama canals.

However, it said this holding pattern for commodities prices in 2024 belies what will be an eventful year as markets remain volatile in the short term before secular trends, especially those linked to the green transition, come to the fore.

Coffee, cocoa prices to go up

Meanwhile, prices for food, feedstuffs and beverages will rise over the course of 2024, driven primarily by beverages, as El Niño will hit production Therefore prices for coffee and cocoa will increase.

EIU however said some relief is in sight, with the US National Oceanic and Atmospheric Administration (NOAA) giving a 72% chance that El Niño will come to an end by mid-year.

“But the damage to this season’s harvests will already be done by then, with coffee and cocoa production forecast to fall by 9% and 13% respectively in the 2023/24 crop season”, it added.

It warned that Russia’s permanent withdrawal from the Black Sea Grain Initiative poses another upside risk to global food prices, particularly wheat, maize and oilseeds.

However, the impact on prices so far has been muted, as Ukraine has managed to export grains and oilseeds via alternative road and rail routes across the country’s western borders. Ukraine’s grain exports initially plummeted following the collapse of the grain deal last summer, but they have recently picked up after Ukraine successfully established a temporary shipping corridor through the western Black Sea with the help of Romania and Bulgaria.