Pakistan's cotton production is projected to decline by 6 percent in 2026-27, as global output also contracts and rising commodity prices put pressure on agricultural markets, according to the World Bank's October 2026 Commodity Markets Outlook.

The report, drawing on estimates from the US Department of Agriculture (USDA), expects global cotton production to fall by 3 percent in the 2026-27 season. Output is projected to decline by 6 percent in China and Pakistan and by 3 percent in the United States. Brazil and India are expected to record increases of around 1 percent each.

Global cotton consumption, meanwhile, is forecast to increase by 2 percent, reducing the stocks-to-use ratio, a measure of supply relative to demand, to 0.57 from 0.63 at the end of the 2025-26 season. The tighter outlook has already supported prices, with cotton prices rising 6 percent quarter-on-quarter in the third quarter of 2026 and remaining around 20 percent above their year-earlier level.

The World Bank expects cotton prices to rise by 14 percent in 2026, followed by more moderate increases of 3 percent in 2027 and 1 percent in 2028 as production recovers.

Global commodity prices set to jump 23 percent

The World Bank expects overall commodity prices to increase by 23 percent in 2026, reaching their second-highest level since 2013. Energy prices are projected to lead the increase with a 32 percent jump, while food commodity prices are forecast to rise by 10 percent. Prices of metals and minerals are expected to reach a record high.

The outlook reflects a series of overlapping shocks. The conflict in the Middle East has caused a historic disruption to energy supplies, while the Russia-Ukraine war continues to hamper Black Sea grain and oilseed shipments and constrain Russian oil product production, particularly diesel.

A very strong El Niño, expected to persist into early 2027, is also threatening agricultural production. Meanwhile, supply constraints and demand from renewable energy infrastructure, electric vehicles and data centers are pushing up prices of several industrial metals.

In 2027, overall commodity prices are projected to decline by 7 percent. However, the expected easing in energy and metal prices will not necessarily translate into lower food costs, with food commodity prices forecast to rise another 7 percent.

Oil prices expected to remain elevated

Global oil production is projected to fall by more than 5 percent in 2026, with Brent crude expected to average $91 per barrel for the year. The World Bank said prices would be even higher if oil demand were not forecast to decline by 2.5 percent, the third-largest annual drop on record after the COVID-19 pandemic in 2020 and the oil crisis of 1980.

The report expects Brent prices to retreat to $79 per barrel in 2027, assuming no major escalation of the Middle East conflict and a recovery in Russian oil production.

Natural gas markets are also expected to remain tight. European natural gas prices are forecast to rise by 58 percent in 2026, while Japan's liquefied natural gas prices are projected to increase by 67 percent. Both are expected to ease in 2027, although damage to Qatari LNG infrastructure is likely to constrain supplies.

Coal prices are projected to rise by 25 percent in 2026 before declining by 4 percent in 2027 as demand softens and renewable energy expands.

The report warns that a renewed disruption to oil exports could push Brent prices to an average of $105 per barrel in 2027.

Food and agricultural markets face mounting pressure

Food commodity prices are projected to rise by 10 percent in 2026 and another 7 percent in 2027, following a 21 percent decline between 2022 and 2025.

Rice prices are forecast to increase by 10 percent in 2026 and 12 percent in 2027, as global production is expected to fall by 2 percent in 2026-27, the first annual decline in a decade. El Niño is expected to weigh on harvests in major Asian exporters. The forecast assumes that major exporters will not impose restrictions similar to those introduced during the 2023-24 El Niño episode.

Wheat prices are expected to rise sharply in 2026 and 2027, reflecting disruptions to Black Sea shipments and hot, dry conditions in the European Union and other producing regions. The World Bank expects some easing in Black Sea trade in 2027, with projected output gains of 11 percent in Russia and 8 percent in Ukraine partly offsetting declines in Argentina, Brazil, the EU and the United States.

The EU's wheat production is forecast to fall by 20 percent to its lowest level in nearly two decades, following persistent summer heat and drought.

Palm oil prices are projected to rise by 14 percent in 2026 and 10 percent in 2027, as El Niño-related weather conditions curb production in Southeast Asia. Soybean oil prices are expected to jump by 39 percent in 2026 and 11 percent in 2027, while soybean meal prices are forecast to rise by 18 percent and 10 percent, respectively.

Beverage prices, by contrast, are expected to decline by 24 percent in 2026 as coffee and cocoa production recovers from earlier weather- and disease-related losses. Cocoa prices are projected to rise by 10 percent in 2027 as adverse weather and lower pod counts tighten supplies in West Africa.

The report said the impact of El Niño could be particularly severe for rice, soybeans, palm oil, coffee and cocoa, whose exports are concentrated in weather-exposed countries.

Metals and fertilizers remain exposed to supply constraints

The World Bank's metals and minerals price index is forecast to rise by 25 percent in 2026, reaching a new high. Aluminum, copper and tin are expected to record significant gains as supply constraints coincide with growing demand from energy transition projects and advanced technologies.

The index is projected to decline by 3 percent in 2027 as supply conditions improve and new capacity comes online. Copper prices, however, may remain elevated due to subdued mined supply growth, including declining ore grades in Chile.

Precious metal prices are forecast to rise by 40 percent in 2026, with gold and silver expected to set annual price records amid demand for financial assets that offer protection against geopolitical uncertainty. Prices are expected to moderate in 2027.

Fertilizer prices are also projected to increase in 2026, partly because of higher energy costs. The report said China's increased urea exports since mid-year had helped dampen prices. Fertilizer prices are forecast to return to around 2025 levels in 2027, assuming lower energy costs and improved access to inputs such as ammonia and sulfur.

Global outlook depends on easing conflicts and manageable crop losses

The World Bank's baseline forecast assumes no major escalation of the Middle East conflict, a recovery in Russian oil production, easing restrictions on Black Sea food shipments and manageable crop losses from El Niño.

However, setbacks could keep energy prices elevated and intensify pressure on food markets. In an adverse scenario, Brent oil could average $105 per barrel in 2027, while food prices could exceed their 2022 levels, pushing global inflation higher and worsening food insecurity.

The report also highlights how commodity markets are increasingly interconnected during periods of stress. Its analysis finds that around two-thirds of commodity price volatility is driven by factors specific to individual commodities, while roughly one-third is linked to shocks in other markets. Industrial metals and food are the main net transmitters of volatility, while oil has played a greater role in spreading price shocks since the Middle East conflict began in early 2026.