John Baffes POLICY SEMINAR Global commodity prices and food security: Navigating new challenges and learning from the past MAR 9, 2022 - 9:30 TO 11:30AM EST

2. Global growth prospects
Source: World Bank, Global Economic Prospects (January 2022 edition).
Note: AEs = Advanced Economies; EMDEs = Emerging Markets and Developing Economies.
1.7
2.4 2.2
1.7
-4.6
5.0
3.8
2.3
4.3
4.8 4.7
3.8
-1.7
6.3
4.6 4.4
2.7
3.3 3.2
2.6
-3.4
5.5
4.1
3.2
-6
-4
-2
0
2
4
6
8
2016 2017 2018 2019 2020 2021F 2022F 2023F
AEs EMDEs World
Percent
2

3. Commodity prices: 2011-22
20
40
60
80
100
120
140
160
Jan-11 May-12 Sep-13 Jan-15 May-16 Sep-17 Jan-19 May-20 Sep-21
US$ index, nominal terms, 2010 = 100
Source: World Bank.
Note: Last observation is February 2022.
Metals
Agriculture
Energy
3

4. Brent and coal daily prices
Source: Bloomberg, World Bank 4
100
200
300
400
500
60
80
100
120
140
1-Dec 8-Dec 15-Dec 22-Dec 29-Dec 5-Jan 12-Jan 19-Jan 26-Jan 2-Feb 9-Feb 16-Feb 23-Feb 2-Mar
Brent Coal [right]
US$/bbl US$/mt

5. Brent futures: May 2022 to December 2025 contracts
Source: Blomberg and World Bank.
Note: Last contract is December 2025. 5
60
70
80
90
100
110
May-22 Oct-22 Mar-23 Aug-23 Jan-24 Jun-24 Nov-24 Apr-25 Sep-25
US$/bbl
January 3, 2022 February 1, 2022 March 1, 2022

6. Real oil prices: 1970-2022
Source: World Bank
Note: Price represents the average Brent, Dubai, and WTI. Last observation is March 2022 (up to March 8). 6
0
40
80
120
160
200
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
US$/bbl, deflated by U.S. CPI (Jan 2022 = 100)
June 2008
$ 171/bbl
March 2022
$ 115/bbl

7. Real coal prices: 1970-2022
Source: World Bank
Note: Last observation is March 2022 (up to March 8). 7
0
100
200
300
400
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
US$/mt, deflated by U.S. CPI (Jan 2022 = 100)
June 2008
$ 232/mt
March 2022
$ 389/mt

8. Real natural gas prices: 1970-2022
Source: World Bank
Note: The index represents a trade-weighted average of Henry Hub (US), LNG (Japan), and European prices. Last observation is March 2022
(up to March 8). 8
0
100
200
300
400
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Index, deflated by U.S. CPI (Jan 2022 = 100)
June 2008
Index = 288
March 2022
Index = 330

9. Then (1979) and now (2022)
9
1979 2022
Commodity markets were under stress due to the 1972-73 oil
price increases as well as subsequent geopolitical tensions
(Middle East) and market tensions (oil companies and oil
producing countries).
Commodity markets are under stress due to COVID-19
supply disruptions and stronger than expected recovery in
demand.
Inflationary pressures: U.S. CPI averaged 11.7% during 1979-
82.
Inflationary pressures: U.S. CPI averaged 4.7% in 2021 (y/y) or
7% (Dec/Dec).
Conflict in energy producing region: Iranian revolution and
Iran-Iraq war.
Conflict in energy, agricultural, and fertilizer producing
region: Russia-Ukraine war.
The energy crisis was led by oil. The energy crisis is led by coal and natural gas.
Demand-driven transition from oil to coal and other types of
energy sources, including natural gas and nuclear.
Climate change-driven transition from fossil fuels to
renewable energy sources. Natural gas is (was?) deemed the
“transition” fuel.
Consequence: After tripling within a year, oil prices kept
declining for the next 6 years due to (i) energy saving policies;
(ii) “demand destruction”; (iii) new oil sources (Alaska, Gulf
of Mexico, and North Sea); and (iv) substitution. Price
benchmarks for most energy commodities were created.
Consequence:
???

10. 10
www.worldbank.org/commodities