Commodities cool down
DESPITE the tough new EU sanctions against Iran, which came into force at the beginning of this month, oil prices have refused to budge above $100 a barrel.
The prices of many other commodities are also under pressure as the Chinese economy runs out of steam. However, the terrible weather in Europe and the US is pushing food prices ever higher.
London crude oil closed at $99 a barrel this week, down by over a fifth from its mid-March peak of $126. It's a similar story with several other commodities. Steel is down by over 40 per cent and copper by 25 per cent over the past year.
However, food prices have been going in the opposite direction, with US grain futures having risen by over 40 per cent in recent weeks amidst fears that the North American drought will result in a poor 2012 harvest. This spike increase in food prices is unlikely to be sustained if the last price surge in 2008 is any guide. It was quickly followed by a series of record harvests.
Far more likely is that, with the global economy poised to take a further downward lurch, food prices will follow other commodity prices downwards when normal climatic conditions return.
Sunday Indo Business