Scotiabank’s Commodity Price Index plunged by 6% in July — the second consecutive month of sharp decline. Currently, the All Items Index is 8.8% below last year.

The decline in Scotiabank’s CPI was led by the Oil and Gas Index as significantly weaker natural gas and propane prices and slightly softer light crude oil prices offset a pick-up in heavy crude oil, which was buoyed by seasonally stronger demand for asphalt for highway construction. Forest products and metal and mineral prices also lost ground in July, more than countering a firmer Agricultural Index. Although oil prices are believed to have bottomed, Scotia expects that natural gas could slip further.

“Slowing global growth largely accounts for the softening in commodity prices — with recessionary conditions in Japan and lower second-quarter industrial activity in Germany, Italy and the United Kingdom as well as in the United States,” says Patricia Mohr, vice president and commodities specialist, Scotia Economics.

Within the Forest Product Index, both wood products and pulp and paper prices dropped in July. More recently, “prices have climbed in the wake of a preliminary 19.31% countervailing duty imposed on August 9th by the U.S. Department of Commerce — alleging subsidies through provincial stumpage fees and various government programs,” says Mohr. In anticipation of a countervailing duty against Canadian shippers, U.S. lumber prices had already increased this year.

The Metal and Mineral Index lost further ground in July with widespread price declines in base and precious metals. Gold prices have rallied slightly in August alongside concern over soft international economic conditions and some weakening in the U.S. dollar against the euro. However, industrial metal prices have slumped further.