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Global Commodity Watch

John Baffes's picture

Non-energy commodity prices in August jumped for the second straight month, up 4.6 percent, in part due to a weak U.S. dollar—down 0.7 percent versus the euro. The increases were again led by strong gains in base metals and food prices, the latter generated by weather-related production losses in Canada and the former Soviet Union.

Crude oil prices rose 1.7 percent in August, averaging $75.8/bbl which is marginally below the average of the past 12 months. Prices have rallied above $80/bbl a few times this year on strong demand growth in China and recovering consumption in the U.S, but steady supply gains and large stocks have kept prices in check. Oil demand growth has weakened in the third quarter, partly due to base-period effects, and is expected to average 1.7 percent in the second half of the year. Non-OPEC supplies grew by more than 1 mb/d in the first half but have slowed to 0.5 mb/d in the third quarter. OPEC crude oil production has held steady at just above 29 mb/d, while oil in floating storage continues to contract—falling to 72 million barrels at end-August.

Agriculture prices rose 4.0 percent in August, with sharp increases in grains and fats & oils. Wheat prices soared 26 percent (up 56 percent the past two months) because of weather-related supply losses in Canada, Kazakhstan, Russia and the Ukraine—and Russia’s subsequent ban on grain exports until the end of its 2011 harvest. Sorghum and maize prices rose 7-8 percent because of expected smaller crops in the U.S., and higher export demand because of the tight wheat market. Fats & oils prices rose 9 percent due to soybean losses from drought in the EU and the Black Sea region, and concerns regarding next season’s crop in South America.

Base metals prices surged 8.5 percent in August, continuing a rally that began in early June due to falling stocks, supply constraints, and strengthening demand outside China. Tin prices recorded the largest increase in August, jumping 14 percent, on a continued sharp decline in inventories, strong demand, and production declines in Indonesia—owing to wet weather and government efforts to curtail illegal mining. Lead prices leapt 13 percent due to strong battery demand, a tight scrap market, and mine and refinery closures.  Zinc prices rose 11 percent, despite high stocks, on supply disruptions, while nickel prices increase 10 percent buoyed by a strong stainless steel sector in China and production outages in Canada.

Get detailed analysis and commodities prices datasets:
For price data and detailed analysis on commodities price movements in August, click here (pdf).
To download the World Bank's latest commodities price forecast, click here (spreadsheet).

Indices of Nominal US$ Prices (2000=100)
Source: The World Bank

Indices of Nominal US$ Prices (2000=100)
Source: The World Bank

Global Commodity Watch is produced by Shane Streifel, John Baffes, and Betty Dow.

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