After booming across the spectrum, commodity prices are expected to be significantly stable this year with downward bias in some commodity groups, according to the recent World Bank report. The spike in prices this year was mainly due to the demand-supply gap as the former spiked with the world economic recovery while the latter had trailed.

With these mismatches being addressed, commodity prices are expected to be stable. Hence, the concern of Central banks over inflation will be less acute next year at least on the commodity front, according a Care Ratings report. In India, domestic conditions will drive agricultural commodity prices while metals and energy will be guided by the global factors.

“If prices remain stable, we may expect a soothing effect on commodity inflation,” it added. The cooling of prices also means that on an incremental basis the benefits that companies in the commodity business witnessed in 2021 will not be replicated for sure next year, it said.

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However, some of the projections on oil are quite bold as the present scene of price being in the $80-85 band looks hard to reverse. But the World Bank is holding hopes of the price averaging $74/bbl, said the Care Ratings report. Crude oil prices averaged $72/bbl in September quarter this year, an increase of 7 per cent over the previous quarter, but with prices fluctuating significantly during the period.

Prices initially softened in August amid worries on renewed outbreaks of the pandemic, but these were offset later by supply disruptions in the US arising from Hurricane Ida and the broader rally in energy prices. Crude oil prices have risen rapidly over the past few months, with the price of Brent reaching a seven-year high of almost $85/bbl by mid-October.

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Prices have been lifted by production disruptions and an announcement by OPEC+ at its meeting in October that the group intends to maintain its previously announced production increases. Among OPEC countries, the shortfall was mainly due to Nigeria and Angola, said the report.

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