Commodity Prices Meander, Forward Momentum Lost

The JoC-ECRI (Journal of Commerce-Economic Cycle Research Institute) index of industrial commodity prices has moved somewhat lower during the last few weeks, and that decline highlights the loss of forward momentum developed during the last year.

The y/y change in industrial commodity prices recently dropped to zero from a high above 30% about a year ago.

Much of that momentum loss is due to lower petroleum prices. The roughly 4% decline of late helped pull the y/y gain down to about 30% versus the doubling as of last November and 50% rate of increase last Spring.

Additionally, metals prices have been moving sideways for the last five months and the y/y rate of increase has fallen to 9% from its high of above 50% one year ago. A recent moderate decline in copper scrap prices pulled the y/y change to 21% versus the high of 60% and steel scrap prices have moved in a similar pattern with the y/y gain falling to 17% versus the high of 125%.

Textile prices have meandered since early March though the y/y gain of zero reflects improvement from negative 9% this past November. Peak y/y growth of 15% was logged in late 2003. In the "miscellaneous" category, lumber prices recently recovered a portion of an earlier decline but remain 12% off the 2004 high.

The CRB (Commodity Research Bureau) commodity price index has moved sideways for over a year. The index differs from the JoC-ECRI version in that roughly half of the weighting reflects agricultural prices. Year to year growth fell negative this past January versus the high of +24% last April. Foodstuffs prices are down 12% from last year's high and livestock prices, though they recovered a bit recently, are flat versus 20% y/y growth this time last year and 40% growth late in 2003.