Commodities are facing strong headwinds after a first half dominated by supply turbulence and inflationary shocks triggered by Russia’s attack on Ukraine. Below, What to Watch takes a look at what the second half has in store for commodities, from natural gas and crude to grain, gold, iron ore and lithium.

Across markets, there is growing talk that high commodity prices will only be cured by second-half recessions. Oil has fallen to near $100 a barrel, metals are set for a deep quarterly drop and crops are cooling.

But the bearish view will be tested. Goldman Sachs Group Inc. — among the most bullish watchers of commodities — just said prices haven’t peaked yet. That’s even with the Bloomberg Spot Commodity Index down 13% from a record high.

“We agree that when the economy has been in a recession for long enough, demand for commodities falls and therefore prices fall,” analysts including Jeffrey Currie wrote in a note. “Still, we’re not quite there yet, with economic growth and end-user demand just slowing down, not falling outright.”

“Even if we don’t feel it yet, we are in a gas crisis,” Germany’s economy minister said last week. Consumer nations are preparing to run their economies without fuel, and competition for liquefied natural gas between Europe and Asia will intensify, especially if a key US export plant remains closed.

The expensive gas will drive up electricity bills for households and businesses, and a widespread crisis would shut down industries from chemicals to fertilizers, fanning the flames of global inflation. Germany is about to unleash the next stage of its contingency plan, and gas rationing across Europe is a real prospect. In Japan, one of the world’s largest importers of LNG, the government is trying to reduce consumption and is considering unprecedented measures to procure more fuel.

Has the food crisis passed its worst? There is growing talk that grain and cooking oil prices have peaked – and perhaps global food prices have peaked as well. Further supplies are underway, with winter wheat harvests underway in the northern hemisphere, and spring wheat, corn and soybeans to follow later. The focus then shifted to production in Australia, Brazil and Argentina. Barring weather problems, production could increase as farmers plant more in response to higher prices.

Global stocks will remain tight in the coming season – and millions of tonnes of grain are stuck in Ukraine – but they may not tighten significantly.

Some Ukrainian shipments are arriving in Europe, while Russia is heading for a bumper harvest. Palm oil, the world’s most consumed edible oil, just fell to its lowest level this year as Indonesia’s top producer increases exports, while wheat, corn and soybeans fell from their peaks. Global food prices have already fallen from their all-time high in March, and further declines could follow.

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