As Summer Forecast Heat Up, So Do Commodities Forecasts

Key takeaways:

Weather forecasts project what may be the hottest year on record for 2024
With an increase in temperatures comes a potential increase in key commodity costs
An increase in energy and crop prices among other commodities could in turn keep inflation pressures elevated

Bloomberg reports that with 2024 well on its way to being the hottest year ever recorded, the prices of the world’s most vital commodities are rising. Some shipping lanes are drying up due to drought, and the threat of damaging and expensive wildfires is increasing. The report stated that 2023 global losses from extreme weather reached $250 billion.

According to the report, climate change is not only driving more extreme weather events and spurring costly natural disasters; but it is also driving up inflation and raising the global price of commodities like natural gas, power and staple crops. With record heat forecast for this summer, traders are facing the possibility of a rocky road ahead.

Carl Neill, a senior energy analyst at StoneX Group Inc., commented, “With uncertainty comes volatility.”. “How will the heat affect summer crops? How much will cooling demand compete with storage injections for natural gas? The market begins to price in that uncertainty.”

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Here’s a look at the markets that according to Bloomberg have the potential for the most volatility. To read the full article, click here.

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