Grande Prairie Daily Herald-Tribune Grande Prairie Daily Herald-Tribune• •Tuesday, Tuesday,March March 8, 8, 2011 2011
Commodity price index begins on a strong note QMI Agency
Mounting tensions in the oil-rich Middle East and bad crop-growing weather are pushing up global commodity prices. That could be good news for Canadian exports, but bad news for consumers at the checkout counter. The Scotiabank Commodity Price Index, which measures price trends for 32 of Canada’s major exports, rose for the seventh straight month in January, by 2.7%. “Overall commodity prices will likely edge higher, though momentum has shifted latemonth from strength in base metals to oil and precious metals, given growing political unrest in Libya, Algeria and parts of the Middle East,” said Patricia Mohr, commodity market specialist and vice-president of economics at Scotiabank. The agricultural sub-index led the January gains, surging 5.5% on the strength of grains and oilseeds, livestock and fish. Spot canola prices have jumped 55% yearover-year on strong demand for vegetable oils, especially in China and India. Adverse weather conditions and the growing proportion of land being used to grow crops for biofuels are pushing up global food prices.
Scotiabank said grocery-store prices will likely rise on both sides of the border, as strains on commodities make their way through the supply chain. The oil-and-gas sub-sector posted a surprise decline in January after repairs on a Canadian crude pipeline left excess supply at Superior, Wis. The trend isn’t expected to continue. WTI and Brent oil prices hit $103 and $120, respectively, last week, fuelled by fears civil unrest in the Middle East could spread to other major oil-producing nations. “The world is much better prepared to handle an oil-supply crisis today than in mid2008, when WTI oil prices skyrocketed to a record $147.90 US alongside strong global demand and dwindling OPEC spare capacity,” Mohr said, adding the stability of Saudi Arabian supply is critical. In the metals and minerals industry, prices gained 3.9% in January, and producers can look forward to even stronger fertilizer and choking coal demand. The forest products sub-index posted a 2.5% rise in the month despite the weak U.S. housing market. Demand for magazine-grade paper and lumber from China are underpinning the sector, the bank said.
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Commodity prices rising
The Scotiabank Commodity Price Index, which measures price trends for 32 of Canada’s major exports, rose in January by 2.7%, the seventh straight month it has jumped 260
1997=100
240
U.S. recession periods
220 200 180 160 140 120
All items
100 80 60
All items (inflation adjusted)
40
20 ’72 ’74 ’76 ’78 ’80 ’82 ’84 ’86 ’88 ’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08 ’10 Source: Scotiabank
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