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Agricultural raw material markets: Diverging trends amid supply shifts

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Agricultural raw material markets: Diverging trends amid supply shifts

This blog post is part of a special series based on the April 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 been relatively stable since the start of the year, as gains in cotton and natural rubber prices were offset by declines in other components. The index is expected to edge down in 2024 and rise somewhat in 2025 as demand strengthens. Global growth prospects present a key risk to the forecast.


Cotton prices fell to a four-year low in May due to better-than-expected supply prospects.
Cotton prices plunged 11 percent in May (m/m) and are now 18 percent lower than they were a year ago. The recent decline is driven by a promising supply outlook for the upcoming 2024-25 crop season. According to the latest U.S. Department of Agriculture assessment, global cotton production is expected to increase by nearly 5 percent during the 2024-25 season. Significant output surges in Brazil (+15 percent) and the U.S. (+33 percent) will more than compensate declines in China (-2 percent) and India (-4 percent), the world’s dominant suppliers. With a projected 3 percent rise in consumption, the global stock-to-use ratio (a measure of supply availability relative to demand) is expected to stay relatively stable at around 71 percent. Prices are anticipated to remain stable in 2024, before slightly increasing in 2025 as supply growth moderates. However, larger-than-anticipated global economic growth is a key upside risk to the price outlook.

Natural rubber prices continued to rise in May due to ongoing supply concerns.
Prices increased by 3 percent during the month, marking a 24 percent rise from the same period last year. This sustained price strength is primarily driven by weather-related supply issues, including limited rainfall in Southeast Asia, partially linked to El Niño, which is nearing its end. Production declines in Thailand (down over 9 percent in the 12 months ending April) and Indonesia (-15 percent), the world's largest natural rubber suppliers, have only been partially offset by increases in Côte d'Ivoire (+23 percent) and other regions (+4 percent). Demand for natural rubber remains robust, particularly from the automotive sector, which accounts for nearly two-thirds of global consumption. In 2023, global tire production grew by 4.9 percent for light vehicles and 2.4 percent for heavier vehicles. Following a 10 percent decline in 2023, natural rubber prices are expected to gain momentum in 2024 and 2025 as production recovers in key producing countries. However, an unexpected downturn in auto production, possibly due to a supply glut in China, poses a significant downside risk to this forecast.

John Baffes

Senior Agriculture Economist, Development Economics Prospects Group

Kaltrina Temaj

Research Analyst, Prospects Group, World Bank

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