Scotiabank

Commodity Prices Strengthen in January

TORONTO, ON--(Marketwired - February 20, 2014) - Scotiabank's Commodity Price Index rallied back by 3.3% month-over-month (m/m) in January, after dropping sharply in late 2013. 

"Commodity prices are in the process of bottoming," said Patricia Mohr, Scotiabank's Vice President of Economics and Commodity Market Specialist. "Prospects for a pick-up in the U.S. economy in 2014 and a slow recovery in Europe -- in the context of a Chinese economy still growing by more than 7% -- point to reasonable demand growth going forward, offsetting the challenges faced by some emerging markets in dealing with capital outflows linked to U.S. Fed tapering."

Highlights in the report include:

• An examination of more than 50 plays across Canada and the U.S. reveals that the oil plays in Western Canada are on average lower cost than in the U.S., including the prolific 'light, tight' 'North Dakota Bakken' and the 'Eagle Ford' & 'Permian' Basins in Texas;
• China's imports of refined copper (+53% year-over-year (yr/yr)), iron ore (+33%) and crude oil (+11.9%) all climbed to record highs in January, despite financial market jitters over a potential slowdown in China;
• Base and precious metal prices averaged higher in January, with equity markets rallying and anticipating a bottom. Gold (London PM Fix) appears to have reached a low last June at US$1,180 per ounce and has traded up to US$1,320 in mid-February; 
• A potential Canada-Korea Free Trade Agreement would provide considerable benefits to Canada's beef industry.

Read the full Scotiabank Commodity Price Index below or find a copy online at http://www.scotiabank.com/ca/en/0,,3112,00.html.

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