News Column

World Markets Drive Down Commodity Prices

April 3, 2013

Isaac Cohen --


This time, stocks and commodities are moving in different directions. Stocks have attained record highs during this year's first quarter, while commodities have moved into negative territory. From January to March, the Standard & Poor's 500-stock index increased 10 percent. In contrast, the Dow Jones-UBS Commodity Index declined 11 percent during the same quarter.

World economic conditions -- recession in Europe, insignificant growth in Japan, the slow U.S. economic recovery, and especially the slowdown in China -- have contributed to the decline in commodity prices. According to the Wall Street Journal quarterly Markets Review and Outlook, the price of almost every commodity has declined. The exceptions were oil and natural gas prices. Even metals were down, such as gold and copper, which declined 4.8 and 6.8 percent respectively.

The consequences for major exporters of the fall in commodity prices can be seen in a decline of growth rates in economies such as Argentina and Brazil. In 2012, Argentina's economic growth was 2.2 percent and Brazilian growth reached only 1.2 percent.

Some analysts consider it premature to conclude that this indicates the end of the current so-called super cycle of commodity price increases, which started with this century. For instance, according to Columbia University professor Jose Antonio Ocampo, "a major characteristic of commodity prices is 30- to 40-year-long super cycles."


Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.

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