March Canadian commodity prices rise 1.3% driven by oil, fertilizers

26 April 2011 19:57  [Source: ICIS news]

TORONTO (ICIS)--Prices of Canadian commodity exports rose 1.3% in March from February and were up 50.9% from a low in April 2009, mainly driven by higher prices for oil, fertilizers, metals and other resources, a bank said on Tuesday.

Toronto-based Scotiabank said Canadian commodity export prices would continue to rise - although at a slower pace - despite concerns about China and fears that high oil prices could hurt global consumer spending.

Patricia Mohr, the bank’s executive vice president for economics, said March's increase, the ninth in a row, was mainly due to higher oil prices, which have surged since February amid the geopolitical turmoil in the Middle East.

But prices for other Canadian commodities, including fertilizers, sulphur and metals, also rose, Mohr said.

Potash prices continued to climb on the back of high grain and oil seeds prices, she added.

Even Canadian pulp prices saw a “surprising increase” in past weeks as a result of demand from China, where some viscose fibre producers are using paper-grade pulp as a substitute for expensive cotton, she said.

Mohr said some prices have lost momentum more recently because of concerns over China's tightening monetary policies to curb inflation.

Market participants are also concerned that high world oil prices could dent consumer spending in both emerging and mature G7 economies, Mohr said.

In addition, commodity prices saw some pressure in April because of the sovereign debt risks in some eurozone economies, as well as Standard & Poor’s issuing a negative warning on the triple-A credit rating of the US.

However, despite these downsides, the cycle has not yet peaked, although gains would likely be “more limited,” Mohr said.

“It is likely premature to call a cyclical peak in global commodity prices, and prices have rallied back in recent days alongside an exceptionally weak US dollar and strong US corporate profits," she said.

Read Paul Hodges’ Chemicals and the Economy Blog

By: Stefan Baumgarten
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