OTTAWA — Commodities entered 2012 on more positive footing after the eurozone debt crisis sent resource prices into sharp retreat in the latter half of 2011, Scotiabank said Tuesday.
“Sentiment has improved in early 2012,” said Patricia Mohr, author of Scotiabank’s Commodity Price Index, “with some investment and hedge funds shifting from short to long positions in base metals, notwithstanding bouts of concern over the eurozone.”
Meanwhile, the U.S. economy is showing signs of recovery, the U.S. Federal Reserve has signalled rates will be kept at ultralow levels until at least late 2014 and hedge funds are anticipating that China will return to pro-growth policies, boosting demand for resources.
That improved sentiment helped make copper the ‘star performer’ in January. Prices for the red metal rose as high as $3.91 US a pound on Jan. 27 after having fallen as low as US$3.08 a pound in early October.
At the other end of the spectrum, natural gas prices plunged to a 10-year low of US$2.32 per thousand cubic feet on Jan. 19. Despite reduced drilling by major U.S. producers, Mohr said it may take “some time” before natural gas prices recover significantly.
Overall, the commodity price index, which tracks 32 of Canada’s key commodity exports, ended 2011 down 0.1% from a year ago and shed 1.3% month over month in December.
Advances in the month were led by forest products (up 0.7%) and agriculture (up 0.8%).
Stronger prices for lumber and oriented strand board more than offset lower pulp prices, while in the agriculture sector, stronger prices for cattle, barley and lobster more than offset a slight decline in wheat and hog price