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Commodity prices are expected to stay at elevated levels in 2022. The war in Ukraine is disrupting the supply of key commodities like crude oil, natural gas and food grains. The outlook for commodity markets depends heavily on the duration of the war in Ukraine and the extent of sanctions.

Brent crude oil prices are expected to average $100/bbl in 2022, an increase of 42% compared to 2021. Natural gas and coal prices are also expected to be significantly higher in 2022, with natural gas prices in Europe projected to be more than double their 2021 levels. Coal prices are expected to settle 80% higher in 2022 relative to 2021.

Ukraine alone was expected to ship around 20 million tonnes of wheat during the current season, about 10% of the global wheat supply, but due to the war, only a small part of it could be transported out of the country. The reduction in grain exports from Ukraine has now raised the levels of food insecurity in the Middle East and North African region.

Fertilizer (phosphate rock and potash minerals) prices also increased sharply during 2022Q1, partly reflecting the surge in natural gas and coal prices, as both are key inputs into fertilizer production.

Most edible oils (soybean, sunflower seed, palm oil & +5) saw a sharp increase in prices this year due to the production shortfalls in South America as well as disruptions to Ukraine’s sunflower seed oil export. Ukraine accounts for 46% of global sunflower seed oil exports and over 6% of overall edible oil exports.

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