Commodity Markets Experience Volatility Amid Global Economic Shifts

Commodity Markets Experience Volatility Amid Global Economic Shifts

As of June 13, 2025, commodity markets are experiencing significant volatility, influenced by a combination of global economic shifts, trade tensions, and geopolitical developments.

China’s Declining Commodity Imports

In May 2025, China reported a decline in imports of major commodities, including crude oil, coal, iron ore, and copper. This downturn signals potential economic concerns in the world’s second-largest economy. Notably, crude oil imports fell to 10.97 million barrels per day, down from previous months. Analysts suggest that sluggish domestic growth, especially in construction, and fluctuating global commodity prices are contributing factors. There is optimism that upcoming Chinese economic stimulus measures could spur future demand for imported commodities. China’s imports of major commodities hiccup in May

Global Food Prices Decline

Global food commodity prices declined in May 2025, with the FAO Food Price Index dropping by 0.8% from April to 127.7 points. This decrease was primarily due to significant reductions in cereal, sugar, and vegetable oil prices. For instance, cereal prices fell by 1.8%, driven by global maize price drops from strong harvests in Argentina and Brazil, and expected record yields in the U.S. Despite this decline, the index remains 6% higher than the previous year. World food prices dip in May as cereal, sugar and vegoils drop

Oil Prices React to Trade Negotiations

Oil prices rose recently as markets closely monitored ongoing U.S.-China trade negotiations, which could ease trade tensions and boost global fuel demand. Brent crude increased by 28 cents to $67.32 per barrel, while U.S. West Texas Intermediate rose 23 cents to $65.52. These gains follow hopes of a potential trade deal and a strong U.S. jobs report. Analysts suggest that a resolution could support global economic growth and commodity demand. Oil up as market watches US-China trade talks

Warnings of Continued Market Turbulence

Global commodities trader Trafigura has issued a warning of continued “turbulence” in commodity markets for the second half of 2025. The company cites geopolitical uncertainty, high tariffs, inflationary pressures, and volatile U.S. policy changes as contributing factors. Despite these challenges, Trafigura reported steady net profits of $1.5 billion for the first half of the year, matching the previous year. However, profitability is trending lower compared to the 2022-2023 energy crisis peak. Trafigura warns of further ‘turbulence’ in commodities markets

World Bank’s Commodity Price Forecast

The World Bank’s latest Commodity Markets Outlook forecasts a significant decline in global commodity prices over the next two years due to weakening global growth and rising trade barriers. Prices are expected to drop 12% in 2025 and a further 5% in 2026, returning to pre-COVID-19 levels observed from 2015 to 2019. While this trend may help moderate near-term inflation, it poses challenges for developing economies reliant on commodity exports. World Bank sees commodity prices falling to pre-COVID levels

Market Outlook

Given the current landscape, stakeholders in the commodity markets should remain vigilant. The interplay of economic policies, trade negotiations, and geopolitical events will continue to influence market dynamics. Monitoring these developments closely will be crucial for making informed investment and operational decisions.

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