Here we go again – following global markets in recent months has been, at times, similar to watching the football world cup: occasionally unpredictable, rewarding and frustrating by turns and taken extremely seriously. But is there anything here to really worry about for those that hedge sensibly?  

Recent weeks have seen some semblance of steadiness return to the market, particularly this week as G20 talks give investors fresh confidence in some of the sterner fiscal measures being adopted by European countries. Still, in the commodity markets, three stories caught the eye over the past week and their impact could have far-reaching consequences.

The first was the leap in sugar prices, up just over 10% on the week at the close on Friday. A supply shortage combined with pre-Ramadan buying has seen prices his 22-year highs. Whilst obviously one of those factors is seasonal, the depletion of sugar stocks and the potential impact of poor harvests will be more of a concern in the longer term.

What this means for buyers is a nervous period during which sugar prices, often highly influential, particularly in the developing world, will continue their volatility and, continue to test schemes to mitigate these kind of swings.

Cocoa and coffee have vaguely similar trajectories; two more products enjoying wild price swings, and which both ended up 0.5% either way of a 5% price increase on the week’s trading. What does this mean? Well for, say, manufacturers of consumer goods, it may mean both tension with suppliers and an onus on collaborating with the business to ensure sales are able to compensate if these price-hikes are, as many expect, ongoing. A 12-year peak in coffee won’t be welcome news for those looking for a cheap cup and there’s little sign that these spikes are easing, despite other areas of the market momentarily settling.

Which brings us to steel. While this week has seen steel prices rise by around 5%, as the FT reports, the general trend has been for them to flatten slightly, allaying some of the fears of a few months back where the move to short-term contracts gave impetus to sharp steel price hikes.

Trying to ascertain the state of the global recovery from these markets is difficult and divides opinion. Yet, procuring the best prices, particularly in soft commodities, is as difficult now as it has been – tightening supply and rejuvenated demand are putting pressure on price and testing not only supplier contracts, but also companies' abilities to manage what looks to be inevitable and in some cases substantial price rises.

Steve Hall is senior staff writer of Procurement Leaders. To find out more about the magazine, click here.