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* Coronavirus halts demand and supply of commodities

International sources recorded that as states in the whole world contend with the health emergency of the COVID-19 pandemic, the economic effects of suspending approximately all activity have immediately impacted the world’s commodity markets and are probable to continue to affect them for upcoming months.

According to the World Bank said in its April Commodity Markets Outlook that the COVID-19 has affected both demand and supply of commodities. Those effects are direct, resulting from shutdowns to mitigate the spread of the virus and disruptions to supply chains, and also indirect, as the worldwide response slows growth and leads to what is anticipated to be the deepest worldwide recession in decades.

1. COVID-19 pandemic has impacted both demand for and supply of commodities: direct effects from shutdowns and disruptions to supply chains, indirect effects as economic growth stalls. Effects have already been dramatic, particularly for commodities related to transportation.
2. Oil prices have plunged and demand is expected to fall by an unprecedented amount in 2020. 3. While most food markets are well supplied, concerns about food security have risen as countries announce trade restrictions and engage in excess buying.

Sources also recorded that the complete impact of COVID-19 on commodity markets will depend on how severe it is, how long it lasts, and how states and the world community choose to respond to it. COVID-19 has the potential to lead to permanent alters in the demand and supply of commodities, and particularly to the supply chains that move those commodities from producers to consumers globally. The Effects have already been dramatic, chiefly for commodities related to transportation. Oil prices have plunged since January, and prices reached an historic low in April with some benchmarks trading at pessimistic levels.

Agriculture prices are less tied to economic growth and have undergone only minor falls over the first months of the year, with the exception of rubber which decline sharply, and of rice, which rose because of worsening crop situations and some trade restrictions. Overall worldwide agricultural prices are predicted to remain broadly stable in this year as production levels and stocks of most staple foods are at register highs. Most food markets are well supplied. However, concerns about food security have escalated as states proclaim trade restrictions that include export bans on certain commodities and engage in excess buying. Similarly, agricultural commodity production, particularly next season, could be affected through disruptions to the trade and distribution of inputs like fertilizer, pesticides, and labor. Snags to supply chains have already affected to the exports from some emerging market and developing economies of perishable products like flowers, fruits and vegetables. Despite well supplied markets, export restrictions could hurt food security in importing states. The Impact of COVID-19 on commodity markets more largely may result in longer-term changes. Transport costs may be higher because of additional border-crossing requirements. Higher trade costs will in particular affect agriculture and food commodities and textiles. Decisions to stockpile certain commodities could affect trade flows and have an effect on worldwide prices. Commodity-dependent emerging market and developing economies will be among the most vulnerable to the economic impacts of the pandemic. In addition to the health and human toll they face, and the effects of the worldwide economic downturn, reduced demand for exports and disruption of supply chains will take a toll on the economies of these states.


Declines reflect a sharp drop in demand and have been exacerbated through uncertainty around production levels among main oil producers. Because of mitigation efforts that have limited most travel, oil demand is predicted to decline through an unprecedented 9.3 million barrels per day this year from the 2019 level of 100 million barrels per day.

In 2020, oil prices are predicted to average $35 per barrel, a sharp downward revision from the October forecast and a 43 percent drop from the 2019 average of $61 per barrel. Prices for natural rubber and platinum, both heavily used by the transportation industry, have also tumbled. Recent attempts through the Organization of the Petroleum Exporters and other oil producers to cut production in response to the plunge in demand would ease some of the pressure on oil markets. However, over the longer run, the present arrangement, to the extent it supports prices, will be subjected to the same forces—the emergence of new producers also substitution and efficiency gains—that led to the collapse of previous OPEC arrangements and other commodity pacts.

Statistics showed that natural gas prices have fallen substantially in 2020 but coal prices have been less affected, since the demand for electricity has been less affected by mitigation measures. Energy prices overall—which also include natural gas and coal—are estimated to average 40 percent lower in 2020 than in 2019, although a sizeable rebound is anticipated next year. It is also said that the stop in economic activity has taken a toll on industrial commodities like copper and zinc, and metal prices overall are predicted to decline in 2020. A deceleration of economic growth in China—which accounts for half of worldwide metal demand—will weigh on industrial metal prices. Gold prices, on the other hand, have increased as buyers have sought safety amid financial market turbulence.

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