46838 Commodity Markets Review October 9, 2008 DECPG, The World Bank Non-energy commodity prices fell 5.2 percent Agriculture prices dropped 5.1 percent in in September, continuing the plunge of the past September--the third consecutive monthly two months due to weakening global demand decline--on weakening demand, lower crude oil and appreciation of the dollar--up 4.0 percent prices, and improved supply prospects. The against the euro in September. Price declines largest declines were in fats and oils which accelerated sharply in early October as concerns plunged 9.4 percent, led by a 14 percent drop in of global demand intensified. Only potassium palm oil prices due to slowing import demand chloride fertilizer prices rose significantly last and a reduction in Indonesia's export tax which month, up 10.2 percent, on a strike in Canada. had fueled the recent spike. Wheat prices fell 10 Crude oil prices fell 13.0 percent in percent due to a projected 10 percent increase in September, averaging $99.7/bbl, and fell global production. The soybean complex fell 7-9 below $83/bbl in early October. The slump percent on expectations of slowing demand in was due to sharply declining demand in the U.S. China and lower demand for biodiesel. Sugar and Europe, and expectations of slowing prices fell 7 percent on expected low ethanol demand in developing countries as the global demand and sharp rise in global supplies. economy slows. Non-OPEC supplies are also set Metals and minerals prices fell 5.8 percent to jump in the fourth quarter and in 2009 which in September, and continued their sharp should result in higher stocks. Inventories declines in early October on concerns about remain relatively low due to a number of global demand. Silver prices dropped 16 disruptions from the Caspian, Nigeria and U.S. percent, versus only 1 percent for gold, as silver Gulf of Mexico. OPEC meets December 17th but demand is more sensitive to slowing economic it is still not known at what level the growth. Most base metal prices have plunged Organization may step in to support prices. one-third or more since early July, as metals Natural gas prices in the U.S. fell 6.7 prices are most linked to industrial output. Some percent in September, despite significant prices have been falling since last year, with disruptions in the wake of hurricanes Gustav and nickel prices down three-quarters from its peak, Ike, due to weak demand, rising inventories, and and have fallen into the cost curve forcing strong growth in shale-gas production. Coal output cuts. Currencies of commodity producers, prices fell 5.3 percent due to weakening demand e.g., Australia and Brazil, have also plunged and significant easing of port congestion and recently, which partly offsets the price effect and vessel queues in Australia. helps sustain profitability and output. Major Price Indices Agriculture Prices - Sub-Indices Indices of Nominal US$ Prices (2000=100) Indices of Nominal US$ Prices (2000=100) 500 300 Energy Food 450 275 400 Metals and Minerals 250 Beverages 350 225 300 200 250 Raw Materials 200 175 Agriculture 150 150 100 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 125 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Prepared in the Development Economics Prospects Group (DECPG) by Shane Streifel, Donald Mitchell, John Baffes and Betty Dow. Katherine Rollins is task assistant. This report is available on http://decpg.worldbank.org. 1 Major Movers September1 percent. Crude oil prices fell 13.0 percent on Potassium chloride prices surged 10.2 percent--unlike other fertilizer prices--due to a accelerating demand reductions in the OECD and imminent jump in non-OPEC supplies that labor strike in Canada, the world's largest exporter. will extend over the next year. Coffee robusta prices decreased 6.4 percent on Palm oil prices dropped 14.1 percent (down more than one-third since June) due to early indications of record crops in Vietnam and Brazil during the 2008-09 season. weakening demand and a reduction in the palm oil export tax by Indonesia (which partly fueled Natural gas (U.S.) prices fell 6.7 percent on weakening demand, rising inventories, and the recent price hike). higher domestic production of shale gas. Silver prices plunged 16.4 percent on the strengthening dollar and expectations of reduced Coconut oil and palmkernel oil (close substitutes) prices dropped 7.5 percent and 7.3 industrial demand for the metal. percent, respectively, due to larger than expected Percent Changes in Price, Nominal US $ palmkernel oil production with stocks reaching -25 0 25 50 75 100 historical highs. Potassium chloride 231.8 Sugar prices fell 7.4 percent as lower crude oil Logs, Malaysia prices are expected to reduce demand for Sorghum ethanol. Global supplies of sugar are expected to Natural gas, Europe rise sharply led by a 15 percent increase in Sawnwood Malaysia Zinc Brazilian sugar cane production. -39.8 Phosphate rock 437.5 Tin prices decreased 8.3 percent on weakening Maize demand although stocks have remained Rice, Thai, 5% 111.2 relatively low on continued supply constraints. Gold Groundnut oil Urea and DAP prices fell 8.3 percent and 6.6 Coffee, arabica percent, respectively, as demand weakened in Rubber, Singapore response to lower grain prices, and export Tea, avg 3 auctions Sep '08/Aug '08 competition intensified as companies lower price Lead -42..1 Sep'08/Sep '07 expectations. Cocoa Beef Copper prices fell 8.4 percent on weak global TSP 175.0 demand and higher inventories, with prices Coal, Australia 119.2 plunging sharply in early October on increasing Cotton, AIndex concerns about global growth. Nickel -39.8 Coffee, robusta Soybeans, meal and oil prices fell 8.6 percent, DAP 154.4 6.9 percent and 7.2 percent, respectively, as Natural gas, US demand from China--the largest importer--is Soybean meal expected to weaken while global production is Soybean oil Palmkernel oil projected to rise from increased plantings. Sugar, world Demand for soybean oil for biodiesel is also Coconut oil expected to decline as crude oil prices fall. Tin Aluminum prices dropped 8.6 percent on Urea, bulk 124.9 Copper weakening demand, sharply rising stocks, and Soybeans continued growth in Chinese aluminum Aluminum production and exports. Wheat, US, HRW Wheat prices declined 10.6 percent as global Crude oil, average spot Palm oil production is projected to increase by 10 percent Silver and ending-stocks are expected to rise by 18 1 Percent change of average September 2008 prices compared to average August prices in nominal U.S. dollars (graph also includes 12-month changes in grey). 2 COMMODITY PRICE DATA Annual averages Quarterly averages Monthly averages Jan-Dec Jan-Dec Jan-Sep Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Jul Aug Sep Commodity Unit 2006 2007 2008 2007 2007 2008 2008 2008 2008 2008 2008 Energy Coal, Australia a/ $/mt 49.09 65.73 138.48 68.37 83.47 114.00 138.65 162.80 180.00 158.40 150.00 Crude oil, avg, spot a/ $/bbl 64.29 71.12 110.65 73.50 87.61 95.31 120.97 115.68 132.83 114.57 99.66 Crude oil, Brent a/ $/bbl 65.39 72.70 111.55 75.04 88.95 96.67 122.39 115.60 133.87 113.85 99.06 Crude oil, Dubai a/ $/bbl 61.43 68.37 107.15 69.97 83.21 91.30 116.67 113.47 131.22 113.21 95.97 Crude oil, West Texas Int. a/ $/bbl 66.04 72.28 113.26 75.48 90.67 97.94 123.85 117.98 133.38 116.64 103.94 Natural gas Index a/ 2000=100 181.6 186.5 268.1 174.4 197.7 235.3 286.0 282.9 305.5 273.7 269.5 Natural gas, Europe a/ $/mmbtu 8.47 8.56 12.63 8.34 9.37 10.86 12.40 14.62 14.37 14.64 14.85 Natural gas, US a/ $/mmbtu 6.72 6.98 9.68 6.17 7.03 8.65 11.35 9.03 11.15 8.25 7.69 Natural gas LNG, Japan a/ $/mmbtu 7.08 7.68 11.58 7.68 8.96 10.45 11.71 12.57 12.35 12.60 12.75 Non Energy Commodities Agriculture Beverages Cocoa b/ c/kg 159.2 195.2 268.9 199.9 199.7 247.7 276.4 282.6 296.7 281.6 269.6 Coffee, Arabica b/ c/kg 252.2 272.4 321.6 271.1 296.1 328.5 315.1 321.2 324.9 322.8 315.9 Coffee, robusta b/ c/kg 148.9 190.9 245.3 200.4 202.1 247.3 243.6 244.8 254.0 248.2 232.3 Tea, auctions (3), average b/ c/kg 187.2 203.6 254.0 211.0 225.6 234.6 254.7 272.7 275.9 274.2 267.9 Tea, Colombo auctions b/ c/kg 191.0 252.2 302.7 254.7 296.7 305.2 298.5 304.3 312.0 299.6 301.3 Tea, Kolkata auctions b/ c/kg 175.4 192.1 226.8 211.3 207.1 176.6 244.0 259.6 274.5 263.0 241.3 Tea, Mombasa auctions b/ c/kg 195.2 166.5 232.5 167.1 173.0 221.8 221.6 254.1 241.3 260.0 261.0 Food Fats and Oils Coconut oil b/ $/mt 607 919 1,374 923 1,098 1,379 1,499 1,244 1,436 1,193 1,104 Copra $/mt 403 607 914 607 724 914 1,013 817 946 780 724 Groundnut oil b/ $/mt 970 1,352 2,251 1,397 1,651 2,007 2,328 2,417 2,536 2,372 2,341 Palm oil b/ $/mt 478 780 1,093 822 928 1,156 1,198 924 1,128 885 760 Palmkernel oil $/mt 581 888 1,302 917 1,084 1,375 1,420 1,113 1,272 1,072 994 Soybean meal b/ $/mt 209 307 459 309 402 443 484 450 508 436 406 Soybean oil b/ $/mt 599 881 1,401 917 1,105 1,384 1,466 1,353 1,511 1,322 1,227 Soybeans b/ $/mt 269 384 571 396 485 563 585 566 634 556 508 Grains Barley b/ $/mt 116.6 172.4 224.2 173.8 194.6 216.8 239.1 216.6 248.1 212.3 189.5 Maize b/ $/mt 121.9 163.7 241.4 152.5 171.9 220.4 259.0 244.7 265.3 235.0 233.8 Rice, Thailand, 5% b/ $/mt 304.9 326.4 679.1 327.1 344.0 478.1 855.3 703.8 731.8 693.5 686.3 Rice, Thailand, 25% $/mt 277.1 306.5 n.a. 306.5 329.5 n.a. n.a. 675.8 700.0 657.5 670.0 Rice, Thailand, 35% $/mt 272.0 300.1 n.a. 298.0 327.7 n.a. n.a. n.a. n.a. n.a. n.a. * Rice,Thai, A1.Special / Super $/mt 219.5 272.3 538.8 265.7 312.0 442.8 693.7 480.0 546.5 468.8 424.8 Sorghum $/mt 122.9 162.7 226.8 150.7 173.4 218.7 246.9 214.7 218.8 209.3 216.0 Wheat, Canada $/mt 216.8 300.4 498.8 309.0 415.3 621.7 484.4 390.2 400.7 400.8 369.1 Wheat, US, HRW b/ $/mt 192.0 255.2 358.5 274.9 341.9 411.8 346.5 317.3 328.2 329.3 294.5 Wheat US SRW $/mt 159.0 238.6 301.1 267.5 326.2 384.1 277.8 241.5 245.4 255.4 223.8 Other Food Bananas EU $/mt 897 1,037 1,269 999 1,068 1,421 1,263 1,123 1,103 1,158 1,107 Bananas US b/ $/mt 677 676 843 699 652 836 920 775 722 799 803 Fishmeal $/mt 1,166 1,177 1,170 1,123 1,075 1,126 1,185 1,200 1,232 1,188 1,180 Meat, beef b/ c/kg 254.7 260.3 329.1 260.3 259.8 282.1 332.7 372.4 387.2 373.4 356.6 Meat, chicken b/ c/kg 138.8 156.7 167.9 163.0 156.7 158.8 167.9 177.1 176.9 177.2 177.2 Meat, sheep c/kg 403.6 412.0 474.5 416.5 437.9 453.6 493.2 476.8 501.3 476.4 452.8 Oranges b/ $/mt 829 957 1,196 1,135 982 1,103 1,322 1,163 1,432 1,132 924 Shrimp, Mexico b/ c/kg 1,024 1,010 1,087 1,003 1,045 1,103 1,109 n.a. n.a. n.a. 1,014 Sugar EU domestic b/ c/kg 64.56 68.09 75.60 68.28 72.00 74.51 77.59 74.70 78.32 74.40 71.39 Sugar US domestic b/ c/kg 48.76 45.77 47.57 46.98 44.48 44.85 46.34 51.52 52.38 51.27 50.92 Sugar, world b/ c/kg 32.59 22.22 28.86 21.86 22.61 28.42 27.01 31.14 31.37 32.21 29.83 Raw Materials Timber Logs, Cameroon $/cum 318.5 381.3 544.6 371.6 409.6 530.8 554.4 548.5 559.6 554.1 531.7 Logs, Malaysia b/ $/cum 239.4 268.0 284.5 269.6 275.5 293.4 282.3 277.7 275.8 272.9 284.5 Plywood c/sheets 595.6 640.7 645.4 646.7 647.0 640.4 647.3 648.6 647.9 649.3 648.8 Sawnwood, Cameroon $/cum 623 760 1,021 756 838 1,036 1,052 974 1,057 957 910 Sawnwood, Malaysia b/ $/cum 749.3 806.3 898.8 820.9 802.5 860.3 935.8 900.3 932.8 879.4 888.8 Woodpulp $/mt 698.6 767.0 857.2 769.8 819.4 850.2 870.7 850.7 878.4 841.8 832.0 Other Raw Materials Cotton A Index b/ c/kg 126.7 139.5 167.5 148.9 153.0 167.9 166.5 168.2 170.4 172.1 162.2 Cotton Memphis c/kg 133.5 142.9 171.9 150.3 155.5 174.2 171.6 170.0 173.0 173.2 164.0 Rubber, US c/kg 231.3 248.0 311.2 234.2 264.8 292.6 311.7 329.1 337.1 332.9 317.5 Rubber, Singapore b/ c/kg 210.8 229.0 295.0 213.8 245.1 275.5 307.9 301.5 321.6 294.9 288.1 continued on next page a/ Included in the energy index (2000=100) b/ Included in the non-energy index (2000=100) c/ Steel not included in the non-energy index $ = US dollar ¢ = US cent bbl = barrel cum = cubic meter dmtu = Dry Metric Ton Unit kg = kilogram mmbtu = million British thermal units mt = metric ton toz = troy oz n.a. = not available n.q. = no quotation 3 COMMODITY PRICE DATA Annual averages Quarterly averages Monthly averages Jan-Dec Jan-Dec Jan-Sep Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Jul Aug Sep 2006 2007 2008 2007 2007 2008 2008 2008 2008 2008 2008 Fertilizers DAP b/ $/mt 260 433 1,068 433 522 860 1,192 1,154 1,185 1,177 1,099 Phosphate rock b/ $/mt 44.2 70.9 337.0 80.0 98.3 234.4 367.5 409.2 367.5 430.0 430.0 Potassium chloride b/ $/mt 174.5 200.2 504.6 209.4 230.8 367.7 511.1 635.0 560.0 640.0 705.0 TSP b/ $/mt 202 339 953 375 425 715 1,036 1,108 1,113 1,132 1,079 Urea, E. Europe, bulk b/ $/mt 222.9 309.4 559.6 283.6 365.4 357.6 575.7 745.4 760.0 770.0 706.3 Metals and Minerals Aluminum b/ $/mt 2,570 2,638 2,823 2,546 2,444 2,743 2,940 2,787 3,071 2,764 2,526 Copper b/ $/mt 6,722 7,118 7,973 7,712 7,188 7,796 8,443 7,680 8,414 7,635 6,991 Gold $/toz 604.3 696.7 897.4 681.1 788.0 926.8 896.0 869.6 939.8 839.0 829.9 Iron ore b/ c/dmtu 77.4 84.7 140.6 84.7 84.7 140.6 140.6 140.6 140.6 140.6 140.6 Lead b/ c/kg 129.0 258.0 237.3 314.3 321.5 289.9 230.7 191.2 194.5 192.4 186.8 Nickel b/ $/mt 24,254 37,230 24,533 30,205 29,219 28,957 25,682 18,961 20,160 18,928 17,795 Silver c/toz 1,157 1,341 1,660 1,273 1,424 1,765 1,720 1,495 1,806 1,458 1,219 * * Steel products index, Japanc/ 2000=100 181.6 182.0 282.3 179.8 192.0 229.6 279.2 338.2 333.8 341.9 338.8 Steel cr coilsheet, Japan, Reinc/ $/mt 693.8 650.0 920.8 650.0 650.0 762.5 900.0 1100.0 1100.0 1100.0 1100.0 Steel hr coilsheet, Japan, Reinc/ $/mt 600.0 550.0 844.4 550.0 550.0 700.0 833.3 1000.0 1000.0 1000.0 1000.0 Steel, rebar, Japan, Reinstatedc/ $/mt 443.8 521.5 803.7 504.2 556.8 639.4 837.5 934.2 980.0 1030.0 792.5 Steel wire rod, Japan, Reinstatc/ $/mt 581.3 533.3 946.3 550.0 553.3 754.0 950.0 1135.0 1075.0 1130.0 1200.0 Tin b/ c/kg 878 1,454 2,032 1,498 1,634 1,778 2,265 2,051 2,314 2,003 1,837 Zinc b/ c/kg 327.5 324.2 210.5 322.7 262.3 243.0 211.3 177.0 185.2 172.3 173.5 NEW World Bank commodity price indices for low and middle income countries( 2000 =100) Energy 220.9 244.8 384.9 251.1 298.6 331.1 417.8 405.9 462.8 400.8 354.2 Non Energy Commodities 192.1 224.8 294.0 228.8 237.3 281.4 308.1 292.7 311.5 290.8 275.7 Agriculture 150.4 180.5 246.6 183.3 200.9 236.6 259.8 243.6 262.6 240.2 227.9 Beverages 145.4 169.9 219.6 173.3 179.4 210.7 221.4 226.8 234.5 227.2 218.7 Food 147.0 184.7 267.9 189.7 212.9 257.2 286.3 260.4 285.9 256.3 238.9 Fats and Oils 137.9 208.8 308.8 216.2 259.1 310.2 327.7 288.4 332.1 279.7 253.5 Grains 149.8 189.0 302.8 188.3 215.6 274.6 335.2 298.5 316.1 295.0 284.5 Other Food 156.4 149.0 182.7 156.1 149.7 171.9 187.4 188.9 197.8 190.5 178.4 Raw Materials 161.4 175.8 208.7 172.8 182.8 199.5 215.2 211.3 220.3 207.7 205.8 Timber 126.0 136.8 150.8 138.9 137.2 146.8 155.4 150.2 154.3 147.0 149.5 Other Raw Materials 200.0 218.5 271.9 209.8 232.7 257.2 280.5 278.0 292.4 274.0 267.4 Fertilizers 168.6 240.1 591.5 240.2 292.0 409.4 624.1 741.1 719.4 763.7 740.1 Metals and Minerals 280.3 314.0 357.4 320.8 305.7 358.7 371.1 342.4 365.4 340.7 321.1 a/ Included in the energy index (2000=100) b/ Included in the non-energy index (2000=100) c/ Steel not included in the non-energy index $ = US dollar ¢ = US cent bbl = barrel cum = cubic meter dmtu = Dry Metric Ton Unit kg = kilogram mmbtu = million British thermal units mt = metric ton toz = troy oz n.a. = not available n.q. = no quotation 4 Selected Commodity Prices, Nominal US dollars, 2001-2008 5 Selected Commodity Prices, Nominal US dollars, 2001-2008 cont'd 6 Selected Commodity Prices, Nominal US dollars, 2001-2008 cont'd 7 8