Scotiabank Commodity Price Index drops in July

Scotiabank’s Commodity Price Index inched down 0.4% last month.

The pace of the decline slowed from June’s sharp 4%.

“In recent weeks, riskier assets like oil and equities have been buoyed by expectations of further Federal Reserve monetary policy easing or a major bond purchase program by the European Central Bank,” says Patricia Mohr, Vice-President, Economics and Commodity Market Specialist at Scotiabank.

The All Items Index, on the other hand, has now fallen 19.5% below its near-term peak in April 2011, depressed by excessive Eurozone market concerns and fiscal austerity measures that weighed on global growth.

Scotiabank’s Oil and Gas Index has fallen 2.5%. “International oil prices rallied strongly in July, as the market refocused on geopolitical tensions in the Middle East, as well as the full imposition of an EU embargo on Iranian oil and U.S. banking sanctions that curbed financial giants from handling Iranian oil payments,” says Mohr.

Read: Energy stocks powered by global demand

Its metal and mineral sub-index inched up by 0.2%, but remained 16.5% below last July’s numbers. Stronger copper, lead and coking coal prices offset slight declines in other base metals, including precious metals and steel-additives.

“This year’s under-performance of mining equities has encouraged a re-examination of project economics, in a bid to ensure high profitability in future, says Mohr.

The Scotiabank Forest Products Index eased back 1.3%, as Northern Bleached Softwood Kraft pulp prices delivered to the U.S. fell US$20 to US$880 per tonne. While some lumber prices eased in the beginning of July, they snapped back in August. The market anticipates a further recovery in U.S. housing.

Read: Wood you buy this investment? and U.S. home building surges in June

Scotiabank’s Agricultural Index actually rose by 3.2% in July, as strength in grains and oil seeds, and firmer hog prices more than countered weaker cattle.

Alberta barley prices surged to a record high of US$274 per tonne, as farmers stepped up shipments to the U.S. to take advantage of high corn prices. Canola seed & oil is one of Canada’s top export categories to China. Read: Canadian trade deficit doubles in June

Read:

Droughts propel commodities to food riot prices

Drought oppresses Canadian and U.S. farmers

Staff

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