Changes in commodity prices attract the attention of many different people from all over the world from trades, researchers, and analysts to policymakers, and just interested citizens. Commodity prices depend on changes in demand and supply forces and there are dozens of reasons why these changes take place. In this review, we do not focus on the price theory but show the rating of the biggest changes in prices for internationally traded commodities that happened in 2016 as well as over the whole period for which this statistics is reported by the World Bank.Largest increases
Palm kernel oil showed the biggest growth during the 2016 – almost 42 percent. When trans fats were banned from the market because of their negative health consequences, a cheap fat with similar characteristics was in high demand. Palm oil fit the bill, as it consists primarily of saturated fats, and it has become the fat of choice to replace trans fats. For the first quarter of 2016, the price grew by 47 percent.
Prices for palm oil products have been consistently rising as supply was tight on weaker production due to the dry weather results in a number of countries. El Nino in 2016 damaged many spheres of agriculture. The strongest drought which destroyed rice and sugar crop was in Thailand. Storms and drought ravaged the Caribbean region. Some farms were destroyed fully, and accordingly, the volume of coconuts and other agricultural products exported from the Caribbean region was decreased.
The next commodity that demonstrated one of the largest price increases in 2016 is coal. Last year was an exceptional year for coal prices. Since January 2016, when the price for coal reached a 10-year low, to November 2016, coal prices have rebounded by 100 percent. This situation is attributable to several factors. First, it is the consequence of an implemented policy in China which aimed at reducing harmful emissions. China is the largest coal consumer and coal producer at the same time. The reduction in own-grown production led to the increase in coal imports. Second, not only China reduced its coal mining. Indian coal industry also had hard times. The strike of miners led to the crisis in the industry. The market was not ready for that and as result coal prices immediately began to soar.
Largest decreases
Natural gas price in Europe showed the biggest decrease among all commodities during the 2016 – minus 37 percent. The price for liquefied natural gas in Japan fell by 33.8 percent. 2015 and 2016 years were not successful for the price of natural gas. The reason is the same as that for oil’s fall which includes a slowdown in the global economy and as a result reducing consumption of energy products. Also, natural gas prices have a dependency on oil prices with a lag of 6-9 months. In this regard, some of an economist estimate that the price will rise and 2017 will be the year of changes for gas prices.
Fertilizers prices continue to decline, although the market could already be nearing a bottom. Urea showed the lowest value since 2004 and fell by 27 percent in 2016. TSP and DAP have almost the same decreases of 24.6 and 24.7 percent. Also, problems in agriculture have a negative impact on demand for fertilizers. Price on fertilizers became too low for some producers and they went from the market. But supply is still high. – Knoema
