With 2025 coming to a close, now is a better time than ever to look ahead to 2026 and define your business’s goals. The commodities landscape presents a complex picture of both opportunity and significant risk for small and medium-sized enterprises (SMEs) across the UK. Global shifts in geopolitical relations, industrial demand, and domestic decisions are converging to create a year where cost management and risk mitigation will be paramount.
What pressures may create financial difficulties for the UK metals industry in 2026?
The outlook for metals is dominated by a split where demand for industrial and precious metals is increasing, driven by advancing technologies and investor anxiety.
- Silver is becoming increasingly recognised for its industrial uses, particularly in the manufacturing of electric vehicles, computing chips and solar panels. But while demand for silver soars, supply is short, and prices are rising for tech manufacturers globally.
- Meanwhile, gold has reached historic highs in 2025 as physical assets are becoming more attractive to investors. Although a trade truce between the US and China could lower prices, the current volatility of precious metals indicates global fiscal anxiety heading into 2026.
- For base metals, copper prices are expected to remain high or rise further due to the massive infrastructure needs of data centres and global electrification. In the midst of the AI revolution, 50,000 tons of copper are required to build and sustain the hyperscale data centres that AI depends on. These large projects also rely on masses of steel, aluminium, cobalt, and nickel to be executed. Since materials like cobalt are often derived from countries suffering deep geopolitical conflict, such as the Democratic Republic of Congo, supply risk is high.
With this in mind, it is clear that the UK’s manufacturing industry and tech SMEs face immediate volatility and spiralling costs. This is likely to translate to squeezed profit margins and operational difficulties for those unable to pass costs on to consumers.
What are the biggest difficulties posed for farms and agricultural businesses this year?
The agricultural sector faces a dichotomy: global supply for many agricultural commodities is currently comfortable, but UK-specific challenges are creating a “labour crunch” and financial strain.
- Dairy: The UK is currently facing a significant milk oversupply, causing decreasing prices for dairy farmers and worsening cash flow for businesses. Meanwhile, the nation’s dairy industry is collapsing under the pressures of ‘tractor tax’, tightening profit margins and causing a record number of farm closures.
- The labour shortage: The UK’s skilled workforce is likely to decline as a result of the Labour Government’s tightening restrictions on immigrant worker visas, forcing farmers to implement automated operations or face higher domestic labour costs. However, with the increased adoption of robotic milkers, UK dairy farmers can expect to see fundamental transformations in their cost structures as they become less dependent on expensive manual labour.
- Arable farming: While 2026 winter crops are off to a promising start, the shadow of this year’s harvest, the second-worst on record, looms large. Farmers must brace for continued weather disruptions and yield volatility, alongside rising fuel and fertiliser costs driven by geopolitical tensions in the Middle East. This instability is compounded by a potential UK trade shift toward the US and Ukraine; while intended to lower consumer costs, such deals risk flooding the market with cheaper grain and driving domestic wheat prices even lower.
Cash flow challenges will emerge across pastoral and arable farming this new year as a result of the UK’s international relationships and failure to protect domestic farms. Farmers will struggle to balance production costs with lower market returns and need to plan for internal and external hindrances in their operations.
What are the forecasts for the energy market in 2026?
The energy market presents a deceptive picture for 2026. While wholesale prices are easing, business bills are likely to go up.
- Global oil market: A massive supply surplus is reshaping the market, with global production set to outpace demand by 4 million barrels per day next year. This glut is largely driven by a surge from non-OPEC+ nations, and led by the United States. While this oversupply is pulling wholesale prices down, UK SMEs should remain cautious: such a significant “supply shock” often triggers short-term price swings as the market struggles to balance itself.
- LNG: Europe has successfully broken its reliance on Russian pipeline gas, shifting instead to a well-supplied Global LNG market. Benchmark gas prices recently hit their lowest seasonal levels since 2022, proving that the market can now absorb demand spikes without the “price panic” of previous years.
For the UK business owner, this “good news” on wholesale prices is a double-edged sword. While the cost of the e n e r g y itself is falling, non-commodity charges are surging. From April 2026, fixed network charges (TNUoS) are projected to rise to fund grid upgrades. Hedging remains the most effective tool to lock in today’s lower wholesale rates, providing a vital buffer against the rising tide of fixed government levies and network charges.
Is Hedging the Smartest Resolution for 2026?
As 2026 dawns, the key risk is not just high prices, but volatility and divergence. While energy costs may soften, surging metal prices and supply chain shifts can render a budget obsolete within weeks.
Why Hedging is Growing in Importance:
- Budgeting Certainty: Locking in prices protects you from unpredictable spikes and demand surges.
- Protecting Margins: Manufacturers are currently looking for coverage beyond 2026 to capitalise on current low prices before geopolitical tensions cause market shifts.
- Counteracting Costs: While you can’t “hedge” your operational costs, fixing your energy and raw material prices provides the financial headroom needed to manage your profit margin effectively.
While some market movements seem clear for the year ahead, unpredictability for 2026 remains certain across the commodities landscape.
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