This blog post is part of a special series based on the October 2024 Commodity Markets Outlook, a flagship report published by the World Bank. This series features concise summaries of commodity-specific sections extracted from the report. Explore the full report here.
The World Bank’s agriculture raw material price index has remained relatively unchanged since the beginning of the year, as some gains in natural rubber and timber prices were offset by declines in cotton and tobacco prices. The index is expected to edge up in 2025-26, supported by firm global demand.
Cotton prices fell by more than 6 percent in 2024Q3 (q/q), reaching a level 15 percent lower than a year earlier. This overall softness reflects weakening demand and strong production prospects for the 2024-25 crop season. According to the latest U.S. Department of Agriculture report (October), global cotton production is projected to increase by 4 percent this season, with major gains expected in Brazil (+15 percent), Türkiye (+25 percent), and the United States (+33 percent) more than offsetting decreases in India (-6.5 percent) and Pakistan (-10 percent). Meanwhile, global consumption is expected to rise by 2.3 percent, keeping the stock-to-use ratio steady at around 70 percent. Following an anticipated 10 percent drop in 2024, cotton prices are expected to rebound in 2025 and 2026 as supply growth slows. Key downside risks to this outlook include weaker-than-expected global economic growth and higher-than-anticipated production.
Natural rubber prices have climbed for four consecutive quarters, surpassing $2.00/kg in October—a nearly 40 percent increase from a year ago. This surge has been driven by weather-related supply challenges, such as reduced rainfall in Southeast Asia. Production fell sharply in Thailand and Indonesia, the world’s largest producers, with declines of over 8 percent and 13 percent, respectively, in the 12 months ending August 2024. These reductions were only partially offset by production gains in Côte d'Ivoire (+18 percent) and other suppliers (+3 percent). Demand for natural rubber is strengthening, growing by 2 percent over the same period. Tire production, which accounts for nearly two-thirds of natural rubber use, rose by 5.8 percent in 2024Q2 (y/y), reflecting strong automotive demand. Following an anticipated 27 percent increase in 2024, natural rubber prices are projected to rise modestly by 3 percent over the next two years. However, potential headwinds from a slowdown in global automobile production, particularly due to oversupply in China, represent a significant downside risk to the outlook.
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