Non-energy commodity prices fell in March for the first time in nine months, down 4.8 percent, despite depreciation of the dollar—down 2.7 percent versus the euro. There were large declines in nearly all main indices.
Crude oil prices surged 11.0 percent in March, up for an eighth straight month, averaging $108.6/bbl
. Prices rose even higher in early April, reaching $119/bbl (with Brent at $127/bbl) due to the near total-loss of Libya’s 1.6 mb/d in oil production and continued political unrest in North Africa and the Middle East. About 0.1 mb/d was shut in March from unrest and strikes in Yemen, Oman, Gabon and Côte d’Ivoire, but market anxiety attaches the possibility of larger disruptions in major oil producing countries, including Nigeria in the run-up to elections later this month (about 1.0 mb/d was disrupted during the 2007 election campaign). The response from other OPEC producers to the supply losses has been limited, in part because of the difficulty replacing Libya’s light, sweet, and distillate-rich crude.
Agriculture prices dropped 4.9 percent in March, the first decline in ten months
, with large decreases in all main indices except beverages and timber. The largest declines were in coconut and palmkernel oil prices, down 14-15 percent, on reduced import demand. Rubber prices declined 13 percent due to concerns of weakening demand in Japan, while sugar prices fell 11 percent on improved supply availability. Wheat prices fell 9 percent on higher planting intentions in the U.S. Partly offsetting these gains was an 8 percent increase in robusta coffee prices due to continued supply tightness in Vietnam from dry weather. Cotton prices rose by 8 percent on low stocks and supply shortfalls.
Metals and minerals prices fell 4.8 percent in March
, following seven months of gains, on various macro-economic concerns, higher oil prices, and policy tightening in China. The largest decline was in iron ore, down 10 percent, due to weak Chinese demand, while most other metals fell 3-5 percent. Silver and gold prices continued to climb on strong investment demand. Following the earthquake in Japan March 11th, metals prices rebounded strongly on expectations that reconstruction efforts will boost metal demand in the medium term. Lead prices have jumped 20 percent on expected strong demand for lead batteries in Japan for back-up power generators for infrastructure, utilities and businesses.
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