ING – Commodities Outlook, 2024

The commodities complex did not perform as expected in 2023, with the market down for the year. Factors such as a mild winter in Europe, underestimated trade flow adjustments, and weak spots in China's economy, along with central bank tightening and a strong US dollar, have created headwinds for commodity markets. However, the outlook for 2024 is moderately supportive, with most commodities expected to have neutral to mildly bullish fundamentals. The geopolitical environment is likely to remain heightened, and expectations of the US Federal Reserve reversing policy tightening and cutting interest rates, as well as a weaker US dollar, should provide some tailwinds to commodities. The outlook for oil depends on OPEC+ policy, and while the market is expected to be balanced in the first half of 2024, it may move into deficit in the second half, leading to higher prices. The outlook for European natural gas is neutral, with storage levels expected to be lower than the previous winter but still above average. New LNG export capacity starting up in late 2024 will make Europe less vulnerable. The outlook for metals depends on China, and while the weak property sector suggests limited recovery in metals demand, tight inventories suggest upside potential. Precious metals are expected to trade higher in 2024, particularly gold. Food protectionism is likely to persist in 2024 due to worries over food security, and grain markets may face pressure due to rising stocks. Soft commodities, such as cocoa and sugar, may remain volatile due to weather events and supply concerns. Overall, the outlook for the commodities complex in 2024 is cautiously optimistic.