Global commodity prices surged as much as 10 per cent in the three months ended September 2012, as food and energy costs went up amid widespread supply constraints, according to the IMF.
“Commodity prices, led by food and energy, leapt 10 per cent in the third quarter due to supply constraints,” the International Monetary Fund said in a report.
The figure is based on IMF’s Primary Commodities Price Index (PCPI) that reflects weighted average of prices for 51 primary commodities.
They are grouped into three main clusters —— energy, industrial inputs (mainly base metals) and edibles (of which food is the main component).
While weather-related supply shortfalls pushed food prices higher, energy prices climbed on supply constraints as well as geopolitical concerns.
The food price index went up 8 per cent in the latest September quarter, compared to the previous three months.
The IMF noted that commodity prices fell in the second quarter of this year on the back of weakening demand.
As per IMF, the increase in the following three months was driven “by weather-related disruptions to key crops — soyabeans, corn, and wheat — whose prices have increased by about 24 per cent on average the past four months“.
Drought in the US was a major reason for the rise in prices of grains and soyabeans.
“Wheat crop estimates have also been downgraded in the Black Sea region (Kazakhstan, Russia, and Ukraine) and in China due to adverse weather conditions.
“Rice prices have remained fairly stable despite the supply concerns associated with below-average monsoon rainfall in India which led to some concern in markets over the summer months,” IMF noted.
Going by the report, global energy prices jumped 14 per cent in the July-September quarter. This trend was driven by unplanned outages and maintenance in offshore oil fields in the North Sea, lower exports from Iran and ongoing geopolitical concerns, among others, it added.
On the other hand, IMF research data showed that metal prices slumped in the 2012 third quarter and “fell 28 per cent from highs in April 2011 on weak demand“.
The report said that markets are concerned about faltering economic growth and weakening import demand in China, which accounts for over 40 per cent of the world’s base metal consumption.
“Metals prices did get a boost in September on various stimulus measures in anticipation of economic growth, but it is uncertain when such measures will translate into growth and higher metals demand—especially in China,” it added.