Published on Data Blog

Raw material commodity prices gain momentum amid stronger demand

This page in:

Agricultural raw material prices gained momentum in the second half of 2020 as global industrial production strengthened. The momentum was led by a sharp rebound in tire manufacturing, which supported natural rubber prices. Following a projected marginal decline this year, raw material prices are expected to gain nearly 2% in 2021, according to the October 2020 edition of World Bank’s Commodity Markets Outlook.

Cotton prices returned to pre-pandemic levels, but further price increases are likely to be capped by near-record stock levels. Early estimates for the 2020-21 season point to a supply drop of 5% (notably by the United States and Brazil) and a broad-based increase in demand, estimated at about 6%. Notwithstanding the rebalancing, stocks are expected to reach a near-record 21.7 million tons, thus limiting the price recovery. Following a projected decline of almost 10% in 2020, cotton prices are expected to gain 3% in 2021. 

Natural rubber prices reached two-year high in November amid improving demand prospects. Natural rubber prices have gained more than 70 % since April 2020 amid demand recovery led by China. The recovery reflects a rebound in automobile manufacturing—more than two-thirds of natural rubber is used by the tire industry.  The rebound follows sharp price drops in the early stages of the pandemic as demand for natural rubber collapsed due to closures of tire manufacturing facilities around the world. Following a projected marginal decline in 2020, natural rubber prices are expected to increase more than 3% in 2021.

World’s top raw material producers

World?s top raw material producers


John Baffes

Senior Agriculture Economist, Development Economics Prospects Group

Jinxin Wu

Research Analyst, Prospects Group

Join the Conversation

The content of this field is kept private and will not be shown publicly
Remaining characters: 1000