Scotiabank’s commodity price index jumped by 4.1% month-over-month in July.
Despite considerable month-to-month volatility, the bank’s All Items Index has also edged up by 1.2% year-to-date over the previous seven months. It’s currently 6.3% above 2012 levels.
“While it’s too early to say commodity prices have bottomed, the correction since April 2011 could be largely over later this year,” said Patricia Mohr, Scotiabank’s vice president of economics and commodity market specialist.
Read: How to read the commodities market
She adds, “The downturn since 2011 has been linked to: an austerity-led recession in the southern Eurozone; a sub-par U.S. economic recovery; and new mine supply coming on stream in a lackluster global economy. But the Eurozone’s real GDP rose by 1.1% annualized in Q2 of 2013, ending six consecutive quarters of contraction. Signs also point to a moderate pick-up in the U.S.”
Data highlights from Scotiabank include:
- Western Canadian Select’s heavy oil prices climbed from US$75 to more than US$90 per barrel in July—the highest level since mid-2008. The bank says WCS heavy oil prices will remain at the US$90 mark in August, which is closer to the average global price for heavy crude.
- Grain and oilseed prices are unwinding from the spike of last summer, which was caused by the drought in the U.S. Midwest. The bank says that after prices soared to record highs in August and September 2012, more favourable weather this growing season looks likely to yield a record U.S. corn crop and a large U.S. soybean harvest, sending prices markedly lower. The canola harvest in Western Canada could also be a record.
- Spot iron ore prices delivered to northern China rebounded to US$127.50 per tonne in July, up from a near-term low of US$115 in June. China’s steel production has increased by 7.4% year-to-date, and now accounts for 49% of the world total.
Read the full Scotiabank Commodity Price Index report.
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