Record temperatures around the world this summer are expected to drive prices higher for %Commodities ranging from natural gas to wheat.
Analysts and traders are bracing for what climatologists are warning is likely to be the
hottest year on record, with temperatures expected to hit all-time highs between June and September.
The first four months of 2024 were the warmest in 175 years, according to data from the National Center for Environmental Information. This year is already among the top five hottest on record and summer doesn’t officially begin until June 21.
The elevated temperatures are expected to drive prices higher for many of the world’s major commodities, including natural gas, crude oil, and crops such as wheat and soybeans.
Commodities analysts add that the situation this summer is likely to be exacerbated by global shipping chaos as routes through the Red Sea and Panama Canal are disrupted by geopolitical tensions and declining water levels.
Throw in the potential for a resurgence of wildfires across North America and Europe, and the summer is likely to see a significant spike in commodity prices, say experts.
Some analysts are forecasting that U.S. natural gas prices could rise more than 50% in coming months, while wheat and coffee markets are expected to rally to new heights.
Farmers around the world continue to struggle with the fact that 2023 was the hottest year on record, devastating agricultural crops and leading to higher food prices for consumers.
Wheat futures are currently trading at their highest level since July 2023 and options traders are raising their bets that prices will rise further in coming months.
Higher food prices could impact U.S. inflation over the summer and frustrate plans by the Federal Reserve to lower interest rates.
Already, scorching temperatures in the southern U.S. and in countries such as India are leading to increased power demand and testing the power grids in many locations.
It all adds up to what is expected to be a significant rise in commodity prices leading into the autumn.
