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Energy and metals cause spike
The RBC commodity price index shot up nearly 15% in December to average 245.20. The index was higher for nine of 12 months in 2005 and is up more than 50% from a year ago. Energy products have made the most significant contribution this year with the sub-index up more than 76 per cent. For December, energy products rose 18.9 per cent. The metals sub-index had the second largest increase, rising 8.7 per cent.
Forestry and agriculture products were also higher for the month, rising 2.6% and 2%, respectively. RBC’s commodity price index and sub-indexes are denominated in US dollars and weighted by major Canadian commodity exports.
Soaring natural gas prices in December were largely responsible for the rise in the energy products sub-index. Cooler weather in the early part of the month led to soaring demand for heating fuel. Hence, natural gas prices rose nearly 27%, reaching a peak by mid-December.
A spell of milder weather across both Canada and the United States lately, has natural gas prices headed lower with the assumption that there is ample supply to get through the season. Crude oil prices were up 1.9% in December to average US$59.43 per barrel.
The metals prices sub-index rose in December and throughout the year with zinc prices leading the way, up 12.7% for the month and 53.5% from a year-ago. Copper also helped out, rising 7% for the month and 45.8% from a year-ago. An ever-increasing demand in China for raw materials such as copper and zinc (which is used as a protective coating for steel), along with supply disruptions in China have led to soaring prices this year. A shortage of processing facilities that convert mineral concentrate into finished metals has also led to higher metals prices.
The forestry products sub-index rose on surging lumber prices that jumped another 4.1% in December. Newsprint prices were up 1% and pulp rose 0.1 per cent. On a year-over-year basis, newsprint and pulp prices were up 11.3% and 0.4%, respectively.
Agricultural products such as wheat (up 2.6%), cattle (up 2.8%) and barley (up 2.4%) contributed to the index’s monthly overall rise.
Canola prices fell 6.3% and are down 14.1% for the year.
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