Report says financial market concerns triggered by risky assets
TORONTO—Scotiabank’s Commodity Price Index fell by 3.3 per cent month-over-month in August. The All Items Index stayed elevated, only moderately below (-5.2 per cent) last April’s near-term peak in commodity prices.
The report suggests financial market concerns have triggered a flight from riskier assets such as equities and commodities—which are dependent upon global economic growth—to cash and the liquidity of U.S. Treasury bonds.
Expectations that U.S. growth may remain exceptionally slow, with minimal inflation, have increased the attractiveness of Treasury bonds, despite very low yields.
These developments lifted the U.S. dollar last week but dampened gold and silver prices.
The Metal and Mineral Index edged down by -0.4 per cent in August as declines in base metals and uranium offset strength in gold, silver and cobalt.
Spot potash prices for overseas sales remained at an average of US$490 per tonne in August and September — up from $379 last December and 43 per cent above the year-earlier period.
Prices for the standard grade will increase by $25 to $535 in Southeast Asia in the fourth quarter, though sales have been spotty, pushing up inventories in Malaysia and Indonesia.
WTI oil prices fell from just over $97 per barrel in July to a low of $79.85 in September before rebounding to $82.
The global supply and demand balance for crude oil tightened in the first half of 2011, with significant production outages in the Alberta oil sands and in the North Sea and with the loss of Libyan production.
The index measures price trends in 32 of Canada’s major exports.