A study by Focus Economics describing the Commodities 2023 Outlook forecasts that commodity prices, which reached record highs in 2022, will fall slightly in 2023 in line with global demand. However, tight supply is expected to keep prices high compared to historical data.
Energy prices, that peaked with the onset of war in Ukraine due to disrupted energy supplies from Russia, are expected to fall slightly going into 2023. Even though limited supply will keep prices relatively high, the prices of gasoline are following a downward trend. Oil prices are set to fall slightly in 2023 in line with lower demand. In 2022, even though higher energy costs are forcing central banks to take measures to control inflation, high oil prices can be offset with the transition towards Green Energy.
World economic growth is expected to slowdown in 2023 and base metal prices have slumped by over 25%, as Russian metal supply has not been affected by sanctions. Metal prices are expected to keep falling going into 2023 in line with the slowdown in the U.S. and Europe. Precious metal prices are expected to increase slightly in 2023, especially for platinum and palladium that are used in catalytic converters for motor vehicles. Since gold is used as a hedge against inflation, there is also rising demand.
Agricultural prices, that reached record highs in 2022 in the aftermath of the war in Ukraine, have fallen sharply with Ukrainian agricultural exports resuming. Agricultural prices are expected to fall slightly but will remain historically high with wheat prices that are expected to remain at around USD 800 cents per bushel. However, this will be mitigated by the increase in wheat supply from Canada.
The outlook for 2023 is expected to be slightly better than in 2022 and the transition towards Green Energy should contribute towards brighter prospects.
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