High Demand Boosts Commodity Prices

Copper prices have risen 35 percent since the summer, while gold, sugar, and cotton were all at 30 year highs. The FAO´s agricultural commodity index had recently touched just one point below its maximum level reached in 2008, Supachai noted, “clearly signaling that the 2010-11 price hikes are similar in magnitude to 2008.

Lamy predicted that prices for most commodities would continue to rise in 2011, as global GDP growth of 4 percent bolsters demand. Over 70 percent of the growth would come from commodity-intensive emerging markets, he said, with China, India and Latin America playing a major role.

Natural gas, zinc and cattle would see the least pronounced price rises, Lamy said, with higher grain prices having slowed demand for live cattle.

Supachai argued that that the rise in commodity prices was likely to continue. “The historical trend is towards increasing demand, especially in high growth areas in the developing world”, he observed. Commodity producers could benefit from the increased demand, he said, if resource rents were properly managed.