The first wave of the pandemic had major impacts on the prices of commodities since its shock impacted both the demand and the supply of commodities. This resulted in an overall decrease in prices, affecting the Oil markets the most, a consequence that rose from the collapse in traveling. The Metal prices also decreased, although this change wasn’t as strong as in oil. The Agricultural market was the one less damaged commodity by the pandemic.
Covid-19 remained at ease in most European countries during the summer. However, as September turned around the corner a new vague began, and it has been even more uncertain than the previous one. According to the World Bank, commodity prices have recovered in the third quarter of the current year. Prices of oil have doubled since April, even though the level is still one-third below the pre-COVID values. The scenario is bright for oil prices since it is estimated that prices will go up to an average of $44 per barrel in 2021, as a slow recovery in demand is matched by an easing in supply restrictions. Both Metal and Agriculture are projected to have gains of 2% and 1%, respectively.
The World Bank warns that all the forecasts made are uncertain. Many factors could change the predictions, such as the duration of the pandemic and the speed and efficacy that the vaccines are produced and developed. All in all, policymakers must find out at which point the shock in this particular market is only temporary. If the shocks are permanent, long-term adjustments will be needed.