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World Bank: Prices of agricultural raw materials, expected to increase

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World Bank: Prices of agricultural raw materials, expected to increase

Forumul Economic Regional Moldova 2024 – Vatra Dornei, 4–6 iulie

The World Bank (WB) reported a marginal increase in the price index of agricultural raw materials in January 2024 compared to December 2023, following a 1% decline in the fourth quarter of the previous year. This uptick in the first month of the current year was driven by slight increases in cotton and natural rubber prices.

Despite averaging 4% lower in 2023 compared to 2022, the index is forecasted to experience a marginal rise in 2024 as demand strengthens. However, the WB warns that weaker-than-expected global growth remains a significant risk to this projection.

• Cotton prices rebound after a 27% decrease in 2023
The price of cotton increased in January 2024 compared to the previous month, following a 4% decline in the fourth quarter of 2023, according to the WB. This agricultural commodity’s price was 27% lower in 2023 than in 2022 due to continued global production exceeding demand.

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Global consumption of cotton fell by 8% in 2023 amid concerns over economic growth slowdown. For the current agricultural season, starting in August 2023, a slight rebound in demand by -0.4% is expected, while global cotton production is estimated to decrease by about 1%.

Major cotton-producing countries such as China, India, and the United States are projected to witness production declines. However, the global supply-demand ratio is anticipated to remain relatively stable at 0.93 for the current farming season. The WB suggests that cotton prices are likely to increase this year as demand rises against the backdrop of reduced production.

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• Strong demand for rubber persists
The price of natural rubber continued to climb in January 2024, driven by robust demand, as reported by the WB. The quoted price rose by 9% in January 2024 compared to December, following a similar increase in the fourth quarter of 2023. Demand for rubber remained strong in 2023, supported by a recovery in the automotive sector, which accounts for nearly two-thirds of global rubber consumption.

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Despite reduced tire production in Brazil, Germany, South Korea, and Russia, global rubber demand increased by 1.4% in 2023 on an annualized basis, with growth in China, India, and Thailand offsetting declines elsewhere. Weather-induced production declines in Thailand, the world’s largest natural rubber supplier, and Indonesia were only partly offset by increases in India (+2%) and Ivory Coast (+22%), according to the cited source.

The WB anticipates a nearly 4% increase in the price of natural rubber in 2024, driven by the recovery in global consumption.

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