Scotiabank Commodity Price Index rebounds in January after year-end decline

TORONTO – Commodity prices started the year on a stronger note, rising 3.8 per cent month-over-month in January after losing significant ground late last year, according to the Scotiabank commodity price index.

“Riskier assets such as commodities and equities were buoyed in January by the 2012 fourth-quarter pickup in China’s economy,” the bank’s commodity market specialist Patricia Mohr said in remarks accompanying the release of the index Wednesday.

“However, market conditions remain skittish, with some industrial commodity prices and equity markets easing back again in late February.”

The oil and gas prices were the strongest performers, rising 9.2 per cent from December, led by firmer light crude prices in Edmonton and stronger propane prices in Edmonton and Sarnia, Ont.

The metal and mineral prices also edged up in January — 0.3 per cent higher as copper prices responded favourably to the pickup in China’s growth, which accelerated to 7.9 per cent in the final three months of 2012 from 7.4 per cent in the third quarter and was accompanied by raw material restocking.

Meanwhile, a partial resolution of the U.S. fiscal cliff — which had threatened massive spending cuts and an end to Bush-era tax cuts — along with expectations of an improved U.S. economy in the second quarter of this year also contributed to the improvement.

The gain in the January index was widespread, with all sub-indexes advancing.

The forest products posted a gain of 2.3 per cent over the month, having climbed 18.9 per cent year over year for the biggest gain of any sub-index. Lumber and oriented-strand board prices continued to march higher in January amid tight supplies, as did northern bleached softwood kraft pulp, offsetting weaker newsprint and SC-A paper prices.

The agricultural index rose by 1.2 per cent, raising it year-over-year performance to 8.1 per cent. Price gains in canola, cattle, hogs and Atlantic Coast lobster more than countered slight declines in wheat and barley.