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The global commodity market has seen significant volatility this year, with prices largely remaining high.

Orange juice and cocoa futures rose to record highs in the first half of the year, while crude oil prices fluctuated in response to news from the Middle East. Gold prices continued to rise, but base metals such as iron ore fell considerably.

“Commodity markets this year have been driven by sentiment and extremely volatile – constantly looking for any sign of optimism to hit new highs, only to retreat at the slightest hint of disappointment,” said Sabrin Chowdhury, Director and Head of Commodity Analysis. at BMI.

The S&P GSCI, a key benchmark for global commodity market performance, rose as much as 12 percent in April year-to-date, before easing to a 2.18 percent gain year-to-date. According to data from FactSet, the best-performing commodities this year were a select group of soft commodities, including cocoa, eggs, orange juice, rubber and coffee.

Unfavorable weather conditions in the main production regions led to strong gains in these commodities.

Biggest winners:

Cocoa:
Ahead of the tax, cocoa prices have surged 66 percent so far this year, hitting an all-time high of $11,722 a metric ton in April, due to bean shortages caused by supply disruptions from heavy rains and disease among growers key Ivory Coast and Ghana. Hedge funds, attracted by profit opportunities, further contributed to market volatility, according to Darren Stetzel, senior vice president of soft commodities for Asia at brokerage StoneX. While prices have since fallen, cocoa futures remain above typical levels, trading at $9,150 per metric ton on the US Intercontinental Exchange. Stetzel expects the cocoa market to stabilize as weather conditions improve in West Africa, although prices are likely to remain high for some time.

Eggs:
A resurgence of bird flu in poultry facilities in the U.S., Japan and other countries has driven egg prices up more than 62 percent per dozen since the start of the year, according to FactSet data. The spot price for a dozen large white eggs now stands at $3.57, according to the U.S. Department of Agriculture and Commodity’s Research Bureau. Bird flu has affected about 18.5 million laying hens in the US this year. On the demand side, consumers have turned to eggs as a more affordable source of protein, noted Karyn Rispoli, managing editor at market intelligence platform Expana. Wholesale egg prices are expected to persist, especially if bird flu infections continue, according to Tim Luginsland, sector manager at Wells Fargo’s Agri-Food Institute.

Orange juice:
Orange juice futures hit a record high in May and continue to sit at an all-time high of $4.49 a pound on ICE. Production declines in Florida, the top US producer, along with inclement weather in climate-fueled Brazil, have pushed the industry into crisis mode. Global orange juice production is expected to decline for the fifth consecutive season due to continued declines in production in Brazil, which accounts for 70% of global production. David Branch, sector manager at Wells Fargo’s Agri-Food Institute, expects prices to remain elevated for at least the next 12 months given the expected orange harvests.

Rubber:
Rubber prices have risen nearly 30 percent since the start of the year due to production declines in Thailand and Indonesia, the world’s biggest producers of natural rubber, caused by weather-related problems such as limited rainfall. The September contract for benchmark Ribbed Smoke Sheet Grade (RSS3) rubber futures is currently trading at ¥337 ($2.29) per kg on the Osaka Stock Exchange.

Coffee:
Coffee futures at ICE rose 25% year-to-date to $2.45 a pound, driven by poor weather conditions in key coffee-growing regions of Brazil, according to BMI’s Chowdhury. El Niño-induced challenges have also caused harvests to decline in major producing regions such as Vietnam and Indonesia. El Niño is a weather phenomenon that brings warmer temperatures and more extreme weather conditions, usually lasting between nine and 12 months.

The biggest losers:

iron ore:
Iron ore prices fell the most among commodities as China’s housing sector continued to slump, leading to weak demand. Worsening Chinese steel mill margins, a key driver of iron ore prices, also contributed to the decline, said Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank of Australia. Benchmark 62% iron ore last traded at $98.10 a tonne on the New York Mercantile Exchange for the contract that expires on August 30. Dhar noted that with steel margins at levels that discourage production, there are concerns that iron ore prices could remain. below $100 per ton in the short term.

Cereal:
Grains such as wheat, corn and soybeans also saw significant declines, caused by what appears to be a bumper crop year in the Northern Hemisphere. Wells Fargo’s Luginsland explained that the global grain industry is currently in a large surplus due to back-to-back bumper harvests in all major production regions, leading to lower prices. Wheat and corn traded on the Chicago Board of Trade are both down nearly 15 percent this year, while soybeans are down nearly 25 percent.

Notable mentions:

Gold:
Gold prices have risen to record highs this year, driven by expectations of a cut in US interest rates and the metal’s appeal as a safe-haven asset. Gold futures recently hit an all-time high of $2,549.9 an ounce.

Despite the volatility, the global commodity market remains high and is expected to continue on that path, according to BMI’s Chowdhury. She expects prices to be supported by a weaker US dollar, especially as the US Fed begins to cut rates later in the year. However, weak demand from China is expected to limit price gains for most commodities, with industrial metals likely to face further losses.

In addition, the global weather pattern is expected to change from El Niño to La Niña by the end of this year, which could be a critical event for the global agricultural market, according to StoneX’s Stetzel. La Niña typically has a cooling effect on global temperatures and occurs every three to five years. Stetzel noted that this will result in the opposite weather conditions seen over the past year as we head into 2025.