Sugar, oil and gold likely to see price hikes in 2024

By Bethan Grylls

- Last updated on GMT

2023 was a highly volatile year for the global commodities market and 2024 will see further disruption. Getty/CharlieAJA
2023 was a highly volatile year for the global commodities market and 2024 will see further disruption. Getty/CharlieAJA

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The Smart Cube’s senior commodity specialist examines the fluctuating commodity market and how things are shaping up this year, as he warns oil, gold and sugar costs are set to rise.

Last year saw prices for certain commodities surging to record highs, with sugar and cocoa prices hitting new heights​. Meanwhile, silver and gold – used in a vast area of industries and many electrical components – also saw their cost points increasing. In contrast, palladium – used in gasoline powered vehicles – crude oil and diesel all saw their prices drop.

According to business intelligence company Smart Cube, this coming year, the prices of precious metals such as gold, silver and platinum are anticipated to climb, alongside sugar and cocoa prices.  

Meanwhile, the oil market is likely to remain volatile, with prices predicted to average $84–90/barrel (bbl) — a rise from an $82/bbl in 2023.

Offering insight into the drivers into continued commodity volatility in 2024, Kumar Amit, senior commodity specialist at The Smart Cube, said it will undoubtedly be driven by ongoing geopolitical tensions.

“Throughout 2023, geopolitical issues around the globe – including the Russia–Ukraine war, Israel-Hamas war and US-China chip dispute – significantly impacted commodities. In 2024, these events will affect the supply-demand balance of multiple commodities and keep the uncertainty quotient high in the market. In fact, should geopolitical tensions intensify, this could potentially cause significant deglobalisation of trade and the financial system, threatening macro-financial stability,” ​he explained.

According to Kumar, the disruptions to the energy market and capital flows have the potential to impact a range of sectors, with the on-going Russia-Ukraine conflict ‘ensuring uncertainty continues’ in the global grains and vegetable oils market. At the same time, the geopolitical risks due of the Israel-Hamas war will ‘push up safe-haven demand’ for gold and silver.

“What’s more, the oil market is expected to remain volatile this year due to geopolitical tensions and economic uncertainties. The potential escalation of war in the Middle East could significantly affect oil prices. Though the Israel-Hamas war has not directly affected the physical oil supply yet, uncertainties surrounding global oil supply conditions could put upwards pressure on crude oil prices in the coming months. However, uncertainty around macroeconomic sentiments — economic slowdown in major economies, elevated interest rates and a slower-than-expected recovery in Chinese demand — will restrict a sharp rise in prices.”

Kumar also pointed to instability as a result of climate change: “Elsewhere, the weather is also likely to have a bullish impact on soft commodities prices in 2024. The El Niño weather phenomenon is set to extend till at least Q1 2024, bringing hot and dry conditions to Indonesia, parts of southern Asia, and West and Central Africa. This will lead to a supply deficit of sugar and cocoa as these regions are key producers of the commodities, resulting in expected upwards momentum in the prices of both commodities.”

In other news, the rate of food and drink inflation has fallen to 8% but prices remain stubbornly high.

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