"SINGAPORE, Dec 31 (Reuters) - Cocoa and coffee are set to close 2024 as the top gainers among commodities for a second year due to a global supply deficit, while steel-making coal will finish as the worst performer, impacted by slow growth in China. Looking forward, analysts point to global trade tensions dominating the commodities scene in 2025 as Donald Trump, re-entering the White House, threatens substantial tariffs. Factors like a robust dollar and gold's safe-haven appeal for investors are likely to buoy precious metals prices; meanwhile, abundant supply may suppress oil for a third consecutive year.
Cocoa nearly tripled in price throughout 2024, significantly exceeding gains in other commodities, hitting a record peak of $12,931 per metric ton in New York this month due to lower forecasts for supply in West Africa following persistent dry weather. Ole Hansen, Saxo Bank's head of commodity strategy in Copenhagen, emphasized the impact of adverse weather in key growing areas on cocoa and coffee prices, underlining the vulnerability of prices when sourced from relatively small regions.
Notably, top cocoa producers Ivory Coast and Ghana have suffered from crop losses due to adverse weather, bean diseases, smuggling, and reduced plantations to make way for illegal gold mining. Coffee supplies have also been strained by dry conditions, with ICE Arabica coffee prices soaring to four-decade highs amid concerns over Brazil’s top producing region's crop damage from severe drought earlier this year.
In 2024, crude oil and bulk metals encountered challenges as China, the world's second-largest economy and primary commodities purchaser, grappled with a property market crisis. Analysts anticipate Brent and West Texas Intermediate crude might face a third consecutive yearly decline in 2025 due to oversupply outpacing demand growth, although policies from key producers like Russia and Iran under Trump's administration could mitigate this trend. OPEC's spare capacity has reportedly reached an unprecedented 5 million barrels per day, with the group extending production cuts to March.
Iron ore prices in China have somewhat recovered in recent months but remain on course for a 15% drop in 2024. Forecasts suggest that iron ore prices could decline further in the coming year as supply increases while Chinese steel demand weakens, despite government stimulus efforts. According to analysts, gold and silver rose by over 25% in 2024 and may continue to climb in 2025, pending decisions from the U.S. Federal Reserve and Trump's policies on tariffs, taxes, and foreign affairs.
Looking ahead, copper and aluminum prices are expected to close higher in 2024 due to limited supplies, the energy transition, and the anticipation of increased Chinese demand from stimulus measures. On the agricultural front, Malaysian palm oil futures surged around 20% in 2024, breaking a two-year downtrend, supported by Indonesia's biodiesel mandate and adverse weather in both Indonesia and Malaysia. Additionally, robust demand and weather-related challenges led to a 42% increase in Tokyo rubber futures.
Conversely, ample supplies led soybeans, corn, and wheat to experience losses in 2024. However, wheat prices may find support in 2025 due to warmer weather in Russia, the largest exporter, potentially impacting output. Brazil, a top soybean exporter, is expected to supply record amounts in 2025, positioning it well to meet an increase in Chinese demand in the event of a trade dispute between Washington and Beijing."