Non-energy commodity prices rose for a seventh straight month in January, up 4.3 percent, partly due to depreciation of the dollar—down 1.1 percent versus the euro. There were strong gains in nearly all main indices.
Crude oil prices increased 3.0 percent in January, up for a sixth month, averaging $92.7/bbl. However, there has been a large divergence between main market crude prices. The price of internationally traded Brent topped $102/bbl in early February on concerns about supply disruptions emanating from political unrest in Egypt and contagion to other oil producing countries. Meanwhile, the price of WTI has fallen $15/bbl below Brent due to a build-up of inventories in the U.S. mid-continent resulting from increased crude flows from Canada. The situation is expected to persist until new pipeline capacity is available to move crude to the U.S. Gulf coast (2013). Globally, falling stocks and strong demand—in part due to cold weather—have underpinned crude prices.
Coal prices soared 18.9 percent in January due to devastating floods in the Queensland state of Australia that disrupted mines, transport and ports, with further disruption likely from recent cyclones. Rain and adverse weather has affected supplies from other major producing countries (Colombia, Indonesia, Russia and South Africa), while demand in the northern hemisphere has been bolstered by cold weather.
Agriculture prices rose 5.8 percent in January, up for an eighth straight month. There were strong gains in all main indices, as adverse weather continued to impact many commodities. The largest increase was for raw materials, up 10 percent, with rubber and cotton hitting all-time highs due to rains in Malaysia and Thailand in the case of rubber, and low stocks, strong demand and supply constraints for cotton. The largest individual gains were for coconut oil and palmkernel oil (up 17-20 percent) due to lower output of the latter in South Asia and tight copra supplies in the Philippines. Sorghum and maize prices rose strongly because of tight supplies in the U.S. and reduced prospects in Argentina.
Base metal prices rose 4.6 percent in January, up for a seventh straight month, on expectations of strong global growth, although there is some concern of slowing in China. In early February, tin and copper prices surged to record nominal highs, as they are the two metals that are most supply-constrained in the near term. Lead prices rose 7.8 percent in January, despite rising stocks, on strong battery demand for replacement and new vehicles. Nickel prices increased 6.4 percent on strong stainless steel demand and lower ore imports into China from Indonesia and Philippines. Tin prices were up 5.0 percent due to supply shortfalls from Indonesia, while copper prices rose 4.5 percent because of constrained mine supply growth.
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