2022 The Year Ahead

Commodity Prices in 2022

As we enter 2022, commodity prices continue to be at an all-time high.

Reading in The Grocer for the UK, the consensus is that prices will remain high throughout 2022.

Rabobank said in its recently published yearly commodities review that it was “highly unlikely” food prices would drop to something like a before-Covid “five- or 10-year average” over the coming 12 months, while the Paris-based Secretariat of the Organisation for Economic Co-operation and Development (OECD) warned overall inflationary pressures “risk lasting longer than was expected a few months ago”.

“Prices are expected to stay at high levels throughout 2022,” says Stephan Hubertus Gay, a senior agricultural policy analyst at the OECD.

Paul Hughes, chief agricultural economist, and director of research at IHS Markit’s Agri-Business Intelligence wing adds he expects “inflationary pressures in overall food prices” even if these are unlikely to reach “the same level” as 2021.

“I don’t see us coming out of this any time soon,” says Abdolreza Abbassian, senior economist at the UN FAO.

With the Philippines still behind the west in terms of COVID vaccinations and many areas recovering from the significant typhoon at the end of December, production levels will remain at the same levels as Q4 2021. Because of this, availability will still be limited versus demand, which will keep prices high.

COVID related staff shortages are affecting all edible oil markets across the globe, pushing prices to record highs – Coconut oil closes 2021 out at $2,100!

Global Shipping and Infrastructure

Shipping costs will also remain stubbornly high, looking at the Drewry’s World Container index – it appears to have plateaued somewhat after the highs in mid-2021 but is still 119% higher than the same week in 2020.

Major shipping companies are investing in new ships but are also seeing record high profits that will be hard to let go of by the boards they answer to.

So, we expect that shipping costs will not drop significantly in the first half of 2022 and probably only dip slightly in the second half of the year.

Port congestion is also not going away in 2022 either, with staff absenteeism because of COVID playing a big part in further congestion in the next couple of months.

Growth and investment in ports infrastructure are prolonged and will not change anything in 2022.

So overall, 2022 will be a carbon copy of 2021 – with the unknown of COVID hanging over us.