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Economy in Brief

U.S. Commodity Prices Are Down But Not Out
by Tom Moeller July 12, 2010

Commodity price figures probably are the most sensitive, high frequency economic indicators. What they show is that U.S. economic growth has lost forward momentum. The Commodity Research Bureau (CRB) index of spot prices is off roughly 6% from its April high. As an indicator of economic growth, notably in the factory sector, this suggests a growth slowdown following a strong winter. The move downward in prices is not, however, ongoing and the figures recently have moved sideways. Therefore, it's safe to conclude that a return to the recessionary environment of 2008-09 is not at hand. 

Metals prices clearly show the pattern of commodity prices overall. Aluminum, lead and zinc prices have been the weakest of the group. However, copper scrap and scrap steel prices have recovered after moderate declines in May and early-June. Textile prices recently moved to the low end of this year's range but have trended sideways since December.

Food prices including butter, corn, soybean oil, sugar and wheat similarly have been firm, moving sideways since showing strength through early-May. That also has been the pattern for livestock & product prices. Conversely, and reflecting the ongoing weakness in housing, framing lumber prices have retraced all of a strong recovery earlier this year though these figures are not in the CRB measures.

Though precious metals and oil prices also are not in the spot price measures, they too have stabilized after earlier strength. Gold prices jumped well above $1,200 an ounce in June but have backpedaled somewhat. Nevertheless, prices have risen nearly one-third during the last twelve months. Crude oil prices have shown the same pattern as gold. Currently near $75 per barrel, prices are down from their earlier high of $86 reached in April but remain up 17% during the last twelve months.      

These commodity price data are available in Haver's WEEKLY database.

Commodity Prices 07/06/10 06/29/10 December '09 Y/Y 2009 2008 2007
CRB Spot Commodity  Price Index: All Commodities 421.0 418.9 416.6 18.9% 421.5 312.2 415.0
   Metals 721.2 721.3 765.3 18.9 804.1 392.9 818.8
   Textiles & Fibers 282.6 284.4 293.5 9.2 293.6 239.9 266.1
   Raw Industrial Materials 474.2 474.5 479.3 17.7 488.1 327.2 476.4
   Foodstuffs 354.3 348.6 340.0 18.5 340.8 291.5 339.7
   Livestock & Products 467.2 472.0 403.8 30.6 402.9 311.0 404.6
Gold 1,197.6 1,235.0 1,136.9 30.4 972.3 872.0 694.6
Crude Oil,West Texas Intermediate 74.96 77.10 73.70 8.1 61.95 99.67 72.30
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