AKP Phnom Penh, April 30, 2025 --

The World Bank is bracing for sharply lower in prices for commodities including rice and fuel this year although gold prices are expected to hit a record high as investors seek a “safe haven” from global trade turmoil.

“Commodity prices are set to fall sharply this year, by about 12 percent overall, as weakening global economic growth weighs on demand,” it forecast in its annual Commodity Markets Outlook released in Washington Tuesday,

“Next year, commodity prices are projected to decline by another 5 percent, reaching a six-year low,” the outlook said.

“Oil prices are expected to exert substantial downward pressure on the aggregate commodity index in 2025, as a marked slowdown in global oil consumption coincides with expanding supply.

“The anticipated commodity price softening is broad-based, however, with more than half of the commodities in the forecast set to decrease this year, many by more than 10 percent."

RICE DOWN

Among these is rice where prices (based on Bangkok prices for 5 percent broken rice) are projected to plunge 28.5 percent from last year to US$421 a tonne this year — US$109 lower than the bank’s October forecast.  

The bank expects the price to stabilise at around US$422 a tonne next year.

Lower rice prices this year reflect “ample supplies and the relaxation of export restrictions by India,” the bank said.
Global rice production in the 2024-25 season is expected to increase by 2 percent, with production in India — which accounts for about 40 percent of global exports—forecast to rise by 5 percent.

The stabilisation of prices next year reflects preliminary estimates from the International Grains Council indicating that “a small increase in global supply will be matched by a similar increase in consumption.”

OIL DOWN

The average price of Brent crude oil is forecast to retreat 20.7 percent to US$64 a barrel this year — down US$9 from the October forecast. A further decline to US$ 60 a barrel is expected next year.  

“This projection is predicated on slowing global economic growth amid rising trade tensions and elevated uncertainty, with a consequent slowdown in global oil demand growth,” the outlook said.

Global oil supply is expected to rise by 1.2 million barrels a day this year — almost twice the increase last year — to an all-time high of 104.2 million barrels a day, before rising by a further 1.0 million barrels next year.

The forecast “assumes that there will be no additional disruptions from geopolitical events and that OPEC+ achieves internal cohesion, with members abiding by agreed quotas,” the bank said.

“Consumption in China in particular, but also in India, Indonesia, and Vietnam,  is expected to be adversely affected by the economic fallout from rising trade tensions.”

COAL DOWN

Prices for coal (based on Australian prices) are seen falling even more sharply — by 26.5 percent to US$100 a tonne — US$20 below the October forecast. A further decline to US$95 a tonne is projected for next year.

In addition to reduced demand for coal with the expected slowdown in global economic growth, the bank noted greater use of renewable energy sources reducing demand for coal-fired generation which is slightly more expensive.

On the other hand, growing power demand in emerging markets and developing economies is “expected to result in continued increases in coal consumption in power plants,” the bank said.

“These two considerations together suggest that global consumption will edge up in 2025 and 2026, with Asia’s share of global demand continuing to rise.”

‘HIGHEST PRICE VOLATILITY IN MORE THAN 50 YEARS’

World Bank’s chief economist Indermit Gill said higher commodity prices had previously been a “boon” for many developing economies, of which two-thirds are commodity exporters.

“But we’re now seeing the highest price volatility in more than 50 years. The combination of high price volatility and low prices spells trouble,” Gill said.

“Developing economies will need to take three steps to protect themselves,” he said. “First, restore fiscal discipline. Second, create a more business-friendly environment to attract private capital, Third, liberalise trade wherever the opportunity exists.”

RUBBER UP

Rubber prices are expected to rise 14 percent to US$2.00 a kilogram this year, US$0.20 higher than forecast in October. By next year, however, prices are forecast to fall back to US$1.90 a kilogramme.

“The price spike late last year was primarily driven by weather-related supply disruptions in Southeast Asia, including the effects of heavy rainfall in Malaysia and southern Thailand,” the bank said.

In the year to March this year, output declines in the world’s largest producers — Thailand (down 1.3 percent) and Vietnam (down 17.8 percent) — were offset by increases in Côte d'Ivoire (up 9.6 percent) and other suppliers (up 5.3 percent).

“Demand for natural rubber rose by nearly 2 percent in the same 12-month period,” the bank said, highlighting a 2 percent increase in China and a 1 percent rise in India.

“Tire production, which accounts for nearly two-thirds of natural rubber use, grew by 3.1 percent for light vehicles and 1.5 percent for heavy vehicles, reflecting strong automotive demand,” it added.

COFFEE UP

Prices for coffee are forecast to surge, with arabica hitting US$8.50 a kilogramme this year — up 51.2 percent from last year and US$3.50 above the October forecast. But a retreat to US$7.25 a kilogramme is expected next year.

Robusta is seen climbing 24.6 percent to US$5.50 a kilogramme, up US$1.30 from the October projection, and back to US5.00 next year.

The bank warned that these forecasts were subject to “significant risks” as low rainfall and above-average temperatures could negatively affect the 2025–26 harvest in Brazil, the world’s leading coffee producer.

GOLD UP

The international price of gold is meanwhile forecast to soar 36.1 percent to a record US$3,250 an ounce this year — US$925 more than forecast in October — before edging lower to US$3,200 next year.

“Gold holds a special status among assets, often rising in price during periods of geopolitical and policy uncertainty, including conflicts,” the bank said.

“Over the next two years, gold prices are expected to remain about 150 percent higher than the average in the five years preceding the COVID-19 pandemic.”

“In contrast, the price of industrial metals is expected to drop in 2025-26, as demand weakens amid mounting trade tensions and persistently soft activity in China’s property sector.”

By Sao Da