Commodity Markets: Natural Gas Price Stabilized at EUR 31 per MWh

The price of natural gas has stabilized at EUR 31 per MWh due to stabilization in global natural gas production in June, which may be short-lived given the increasing restrictions on the flow of Russian gas to Europe, writes the chief economist of HUP, Hrvoje Stojić, in weekly analyses.

Between 2021 and 2023, only 41 billion cubic meters (bcm) of LNG export capacity has been launched, which is 60 bcm less compared to the average for the period from 2019 to 2021. Due to the worsening geopolitical situation, it is expected that by the end of 2030, as much as 300 bcm of new LNG export capacity will be launched to reduce dependence on Russia.

Additionally, the U.S. and Qatar are expected to take over the role of replacing Russian LNG production. The U.S. is a key driver of new LNG export capacity (51% of global supply), and last year it was also the largest exporter with 118 billion cubic meters. Currently, about 101 bcma of capacity is under construction in the U.S., which would increase LNG production by 85 percent. On the other hand, Qatar is expected to account for about 23 percent of global LNG supply by 2030 after increasing its export capacity from 105 bcm to 193 bcm by 2030. The price of gas is expected to rise slightly to EUR 35 per MWh by the end of the year.

Agricultural Commodities

The price of corn has currently fallen by 7 percent month-on-month to 411 cents per bushel, due to ample stocks of unsold corn. The U.S. Department of Agriculture (USDA) has raised its corn production estimates in the U.S. for the 2024/2025 season by 250 million bushels, now expecting the output to be 15.1 billion bushels on increased corn planting areas.

Despite the increase in production, the USDA expects a decrease in stocks this season to 2.097 billion bushels, below market expectations of 2.29 billion bushels. Stocks are expected to decrease precisely due to anticipated stronger market demand, which encourages a renewed rise in the price of this commodity. The global corn balance is largely in line with the market regarding stocks. An increase in ending stocks is expected from 310.8 million tons last month to 311.6 million tons this season. The U.S. is still expected to be the leading corn producer with about 383.6 million tons, followed by Brazil with 127 million tons. The EU is projected to demand about 78.1 million tons of corn this season. The price of corn could rise to 438 cents per bushel by the end of 2024, conclude HUP.