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Commodity prices inch down in July: Scotiabank

TORONTO, Ont.–Scotiabank’s Commodity Price Index edged down by 0.3% month-over-month (m/m) in July, as oil prices lost momentum, partly due to an easing of concern over geopolitical supply risks in Libya and Iraq.

“On a more positive note, a cyclical recovery in base metal prices is getting underway, with dramatically higher zinc and nickel prices expected in 2015,” said Patricia Mohr, Scotiabank’s Vice President of Economics and Commodity Market Specialist.

“Zinc led a strong rally in base metals in July, climbing from US$0.96 per pound to almost US$1.05 — an increase of 17% since late 2013. Commodity funds and investors have bid up zinc prices, anticipating tightening supplies over the next three to four years — with mine supplies not keeping pace with demand growth. In our view, zinc prices will climb to US$1.25 in 2015 and a very lucrative US$1.60-1.70 in 2016.

“A recovery in nickel prices is also underway. London Metal Exchange (LME) nickel has spurted from US$6.31 per pound in December 2013 to US$8.64 in July and should climb to US$10.75 in 2015 and US$12 in 2016. U.S. durable goods orders in July surged by a record 22.6% m/m, driven by strength in nickel-intensive commercial aircraft orders, following the Farnborough Airshow.”

Other highlights in the report include:

• Canada’s merchandise trade surplus on cattle and beef, as well as hogs and pork, has increased significantly this year as a result of higher volumes as well as prices. The number of Canadian feeder cattle exports to the U.S. has jumped by 41% year-to-date.

• Global potash deliveries could be on the high side of expectations at 58 million tonnes (+7%) in 2014, boosted by strong sales in North America, record fertilizer application in Brazil — linked to higher soybean plantings and robust coffee prices — and a modest pick-up in demand from palm oil growers in Malaysia and Indonesia.

Read the full Scotiabank Commodity Price Index online at:,,3112,00.html.

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