WORLD BANK / COMMODITY PRICES

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26-Apr-2022 00:06:37
The World Bank Group said on Tuesday that the war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024. WORLD BANK

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STORY: WORLD BANK / COMMODITY PRICES
TRT: 6:37
SOURCE: WORLD BANK
RESTRICITONS: NONE
LANGUAGE: ENGLISH / NATS

DATELINE: 26 APRIL 2022, WASHINGTON DC

SHOTLIST:

1. Wide shot, World Bank Group headquarters
2. Med shot, someone reading the World Bank Commodity Markets Outlook
3. SOUNDBITE (English) Peter Nagle, Senior Economist, World Bank Group:
“What we've seen is a surge in commodity prices following the invasion of Ukraine. And that largely reflects the fact that both Russia and Ukraine are large commodity exporters. But even before this, we had seen a rally in commodity prices as economies opened up following COVID-19 lockdowns and we also had some supply disruptions in several commodity markets. Now the increase in prices has been broadbased not just in energy but also in food. And that's starting to have very real economic and humanitarian impacts.”
4. Various shot, World Bank Group Headquarters
5. Wide shot, the Commodity Markets Outlook report as seen on a tablet computer
6. SOUNDBITE (English) Peter Nagle, Senior Economist, World Bank Group:
“ Sure, so we're expecting energy prices to rise by about 50 per cent in 2022 compared to last year. So a large increase. And particularly in the case of crude oil, the price for Brent crude oil, the international benchmark is expected to average about $100 a barrel this year, and that would be its highest level since 2013. We expect prices to decline a bit in 2023 and 2024, but they are expected to remain much higher than we previously anticipated. Now in the case of natural gas, we're actually expecting prices to double in 2022 compared with last year, and that reflects the importance of Russia as an exporter of natural gas, particularly for Europe. For natural gas, there aren't really any good or good producers who can readily ramp up production and so you don't have the same amount of spare capacity as you have for crude oil.”
7. Close up, special focus section of the Commodities Market Outlook that focuses on Ukraine
8. Various shots, World Bank Group Headquarters
9. SOUNDBITE (English) Peter Nagle, Senior Economist, World Bank Group:
“So for food the big action is in wheat prices where we expect a 40 percent increase in 2022. Now that reflects the importance of Russia and Ukraine as exporters. Together they account for around one quarter of global wheat exports. And particularly exports from Ukraine have been interrupted by the war. Now this is a particular issue for countries in the Middle East and North Africa, since they rely on Russia and Ukraine for a very large share of their wheat imports. The other important aspects in food markets is the price of fertilizers. Fertilizers are made from natural gas. And so the surge in prices we've seen in natural gas has also pushed up the price of fertilizers. And a key risk that we're watching is that farmers start to use fewer fertilizers and that will reduce agricultural yields particularly in developing economies.”
10. Various shots, scrolling through the Commodity Markets Outlook
11. Various shots, World Bank Group Headquarters
12. SOUNDBITE (English) Peter Nagle, Senior Economist, World Bank Group:
“Sure, so the surge in prices that we've seen over the past few months, is starting to have very real economic and humanitarian effects. Households across the world are starting to feel the cost of living impacts. And we're particularly worried about the poorest households. For the everyday consumer, this means higher prices when they go to fill up at the pump as well as higher prices at the grocery till. Now for the poorest households is particularly bad because they spend a larger share of their income on food and energy. And so they're particularly vulnerable to these increases in prices.
13. Various shots, World Bank Group Headquarters
14. SOUNDBITE (English) Peter Nagle, Senior Economist, World Bank Group:
“So for the green transition, the war in Ukraine has complicated the outlook for the energy transition. On the one hand, it's perhaps a reason for countries to accelerate the installation of renewable energy, since it will reduce their reliance on imports of fossil fuels from Russia. At the same time, the shortage in energy is leading to countries to turn to fossil fuels once again. So China, for example, has announced a plan to sharply increase its production of coal because it's worried about fuel shortages. Now that will help alleviate some of the pressure in energy prices. It will lead to – it will increase the amount of carbon dioxide emitted by China, since coal is the most polluting of the fossil fuels. For consumers higher prices might lead to them starting to increasingly turn to electric vehicles. And that can help encourage the energy transition as people switch away from fossil fuel or gasoline powered cars towards electric vehicles.”
15. Various shots, Commodities Markets Outlook Report  
16. SOUNDBITE (English) Peter Nagle, Senior Economist, World Bank Group:
“So for policymakers, what we've seen so far is that governments in a lot of countries have turned to tax breaks and subsidies particularly for energy. Now these can provide a temporary respite to households who are suffering from cost of living pressures. However, they don't solve the underlying problem, and they can actually make things worse by exacerbating the demand. Instead, what we're recommending is that to protect the poorest households, governments can make use of social programs such as cash transfers or eating programs in schools, and those can really help target the poorer households. But more broadly, to tackle energy, it's important for governments to also address the fundamental supply and demand issues. Now in terms of demand, governments can put through policies to boost energy efficiency, for example, insulating buildings, or increasing the efficiency requirements for cars. On the supply side, this is a good opportunity for governments to encourage investment in renewable energy technology, and that has the combined effect of both helping reduce energy costs, but also to achieve energy security and climate change objectives.”
17. Wide shot, someone scrolling through the Commodity Markets Outlook.

STORYLINE:

The World Bank Group said on Tuesday that the war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024.

As detailed in the Group’s latest Commodity Markets Outlook, the increase in energy prices over the past two years has been the largest since the 1973 oil crisis. Price increases for food commodities—of which Russia and Ukraine are large producers—and fertilizers, which rely on natural gas as a production input, have been the largest since 2008.

Energy prices are expected to rise more than 50 percent in 2022 before easing in 2023 and 2024. Because of war-related trade and production disruptions, the price of Brent crude oil is expected to average $100 a barrel in 2022, its highest level since 2013 and an increase of more than 40 percent compared to 2021. Prices are expected to moderate to $92 in 2023—well above the five-year average of $60 a barrel. Natural-gas prices (European) are expected to be twice as high in 2022 as they were in 2021, while coal prices are expected to be 80 percent higher, with both prices at all-time highs.
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