Commodity prices rose 19.2% during 2003 and finished the year with a 5.2% gain for the month of December, according to a new report from BMO Financial Group.

The BMO Commodity Price Index for December was 140.9 (1993=100).

“Commodity markets were very robust in 2003 with many commodity groups posting strong gains through the year,” said Earl Sweet, assistant chief economist, BMO Financial Group. “Looking ahead, we anticipate gains in 2004 to be more moderate, with non-energy commodity prices continuing to rise while energy prices should adjust downward from their current very high levels.”

In December, the Oil and Gas Index continued its upward movement, jumping 13.3% to 225.3 (1993=100). The substantial rise in the sub-index was due in large part to the whopping 22% increase in the price of natural gas. Oil prices rose 3.9% in December.

“December’s increases in natural gas and crude oil prices were driven by concern over fuel inventories and the onset of much colder weather in major consuming regions,” said Sweet.

The BMO Metals and Minerals Index also continued to strengthen in the month, rising 6.4% to 132.1. Widespread increases, particularly in the second half of the year, lifted the sub-index by 25% over the past 12 months. In December, Nickel prices gained 20%, with Copper up 8% and Aluminum rising 3.3%.

After making dramatic gains over the past few months, the Forest Products Index gave up 2.5% in December, ending at 103.9 The sub-index is still 20% higher than in December 2002.

Agricultural prices fell 3.1% in December to finish at 100.9, down 0.7% for the year. Agricultural was the only sub index, which did not post major increases in 2003.

“The demand for major grains and oilseeds is expected to rise in 2004, which, combined with low inventories relative to consumption, should mean that prices will stage a comeback during the year,” said Sweet.

http://www.newswire.ca/en/releases/archive/January2004/16/c0539.html