Falling commodity prices

Reflecting record world-wide harvests, the latest FAO estimates show that world cereal output touched 2.2 billion metric tonnes, a new record, and 5% more than last year. Rice production increased 2% over last year's record harvest, and wheat production increased by about 11%, fed by a phenomenal 25% rise in Europe.



Declining demand and recessionary expectations may lie behind the steep decline in global oil and commodity prices. Copper rose to $8443 pmt in the second quarter this year, but it is now selling at $6991, a decline of over 17%. While iron ore prices have largely remained static this year at around $140 per dry metric ton, this actually represents a slowdown in a six-year long price surge. The World Bank’s steel products price index rose continuously over the year to a high of 342 in August but dipped marginally to 338 in September.