(January 26 – 11:40 ET) – The commodity price recovery of 1999 has carried into to 2000 and is expected to continue, say TD Bank economists. TD predicts that base metals and forest products will lead the way, on the back of strengthening global economic conditions.
TD’s Commodity Price Index rallied 19 percent in 1999 and TD is expecting another 7 percent increase by the end of 2000. “This will finally bring commodity prices in U.S.-dollar terms back up above the levels recorded prior to the Asian crisis in mid-1997,” says Teresa Courchene, director of economic research at TD Bank Financial Group.
At the same time the Canadian dollar is expected to hold its own. “This year, Canadian producers will see little change in commodity prices in Canadian-dollar terms, as the rise in global commodity prices is offset by an appreciation in the Canadian dollar towards the 72 U.S.-cent level by the end of 2000,” says Courchene.
Oil prices doubled in 1999, says TD. They’re expected to pullback through 2000. However, natural gas prices are expected to rise by a further 20 percent by the end of this year. Lumber prices should rise a little, benchmark pulp prices should increase by US$40 per ton, and newsprint prices should be flat. Base metals are expected to rise 9% in 2000, although gold will again be under pressure. Wheat prices are expected to recover too.
-IE Staff