Across markets, there’s growing talk that high prices for raw materials will be cured only by recessions in the second half. Oil has sunk toward $100 a barrel, metals are poised for a deep quarterly slump, and there’s a cool-off in crops.

But the bearish view will be tested. Goldman Sachs Group Inc. — among the more bullish commodity-watchers — just said prices haven’t yet topped out. That’s even with Bloomberg’s index of spot commodities down 13% from a record.

“We agree that when the economy is in a recession for long enough, commodity demand falls and hence prices, fall,” analysts including Jeffrey Currie wrote in a note. “Yet we are not yet at that state, with economic growth and end-user demand simply slowing, not falling outright.”

A hard winter
“Even if we don’t feel it yet, we are in a gas crisis,” Germany’s Economy Minister said last week. Russia’s squeeze on flows to Europe risks a historic global shortage — and higher prices still — with peak demand looming this winter. Consumer nations are preparing to run economies without the fuel, and competition for liquefied natural gas between Europe and Asia will intensify — all the more so if a key US export plant stays shut.

Expensive gas will increase power bills for households and businesses, and a full-blown crisis would shut industries from chemicals to fertilizers, fanning the flames of global inflation. Germany is preparing to trigger the next stage of its emergency plan, and gas rationing across Europe is a real prospect. In Japan, one of the world’s top LNG importers, the government is trying to curb consumption and is considering unprecedented moves to procure more fuel.

Feeding frenzy
Is the food crisis past its worst? There’s growing talk that grains and cooking oil prices have peaked — and maybe global food costs have too. More supply is on the way, with winter wheat harvests getting under way in the northern hemisphere, and spring wheat, corn and soybeans following later. The focus then turns to production in Australia, Brazil and Argentina. Barring weather woes, output could rise as farmers plant more in response to elevated prices.