As 2025 draws to a close, commodity markets stand at a crossroads. After a tumultuous five years, investors and industry leaders alike seek clarity on the forces shaping prices and strategies to navigate an uncertain landscape.

Macro Overview: Commodity Markets in Late 2025

The decade since 2020 has been marked by unprecedented volatility in commodity cycles, characterized by short-lived but intense periods of booms and slumps. World Bank projections indicate that aggregate prices are set to fall by about 12% in 2025, with a further 5% decline expected in 2026, potentially pushing the aggregate commodity price index at a six-year low.

Key drivers behind this downtrend include a global economic slowdown, especially disappointing demand in China, and expanding supply across many commodities such as oil, wheat, and steel. Trade tensions, currency swings—particularly the strength of the US dollar—and persistent geopolitical risks continue to compound market uncertainty.

Spotlight on Energy Markets

Energy prices have led the broader downturn. Oil is forecast to see its price index drop 17% in 2025 and an additional 6% in 2026, according to IMF and World Bank estimates. OPEC+ faces a dilemma: raise output to sustain revenues or defend prices by cutting production.

• Oil: Despite record inventories, US oil supply growth has slowed, supporting prices near producers’ marginal costs. Sluggish global demand—driven by efficiency gains and electric vehicle adoption—keeps downward pressure intact.
• Natural Gas: European TTF futures are projected to average $12.5/MMBtu in 2025, while US Henry Hub is seen at $4.0/MMBtu, reflecting high storage levels and shifting LNG flows.

Industry participants should monitor OPEC+ policy signals and inventory data closely, as sudden shifts could spark short-term rallies or deeper slumps.

Metals Market Dynamics

Steel markets remain oversupplied, particularly due to China’s large export volumes amid subdued domestic demand. New capacity additions risk further depressing global prices, even in regions with protective tariffs.

Precious and battery metals offer a contrast. Gold continues to benefit from central bank buying despite broad weakness, with forecasts around $4,077.55/oz in 2025/2026. Meanwhile, demand for critical minerals remains strong given the energy transition. Copper is expected near $5.01/lb, supported by growth in electric vehicles and grid infrastructure.

Aluminum and nickel markets may see modest upside in the second half of 2025, as rate cuts and capital spending on renewable projects help absorb excess supply.

Agricultural Commodities Outlook

Grain markets are bottoming after a sharp 2024 correction. Soybean stocks-to-use ratios are the highest in 17 years, keeping pressure on prices, while maize and wheat inventories remain ample. Weather-related disruptions may inject volatility, but broad supplies should cap major rallies.

The IMF food and beverage price index rose 3.6% between August 2024 and March 2025, with cereals up 0.6% due to adverse weather. Rice prices, having fallen when India lifted export curbs, may remain stable unless further policy shifts occur.

Key Price Forecasts at a Glance

Below is a snapshot of leading contract forecasts and trends for late 2025 and early 2026.

Navigating Risks and Opportunities

With prices skewed to the downside, investors and stakeholders must remain agile. Upside risks—such as a rebound in Chinese demand or geopolitical supply shocks—can provide sudden relief, while policy shifts may alter long-term trajectories.

• Diversify across sectors: Balance exposure to energy, metals, and agriculture to mitigate sector-specific risks.
• Hedge currency and inflation risks: Use derivative instruments or inflation-linked assets to protect real returns.
• Focus on critical minerals: Allocate to copper, lithium, and nickel to capture the energy transition story.
• Monitor policy and inventory data: Timely insights on OPEC+ decisions, USDA stocks reports, and central bank actions can guide tactical moves.

Conclusion: Charting a Path Forward

Late 2025 presents both challenges and opportunities in commodity markets. While broad price weakness demands caution, strategic positioning—rooted in informed data analysis and flexible risk management—can uncover hidden value. By balancing portfolios, focusing on resilient sub-sectors, and staying alert to macro shifts, investors can not only weather volatility but also participate in the next commodity upcycle.

The horizon may appear uncertain, but those who adapt with insight and agility will emerge stronger as markets evolve.