Why Are Commodity Prices Falling?

Rendahnya harga komoditas dengan penurunan peak to trough lebih dari 30 berlangsung selama durasi yang sama, rata rata sekitar tujuh tahun. Kini kegagalan tersebut memasuki tahun keempatnya dan harga komoditas non minyak (dibandingkan harga ekspor barang manufaktur) telah merosot sekitar 25 .

Competition from Latin America.

Among the metals, copper prices declined by 36 per cent between June 1997 and February 1998, nickel by 24 per cent, zinc 22 per cent, and lead 16 per cent, while among the agricultural materials sawnwood prices fell by 34 per cent, rubber 29 per cent, wool 27 per cent, and jute 25 per cent.

As more paper money came into use, the value fell.

Such fundamental changes in the supply side of the market naturally drove oil prices lower a lot lower. Prices plummeted by more than half in a period of just a few months last year, catching many oil traders and analysts by surprise.

Hamper the setting of prices through the free play of the market by artificially encouraging their rise or fall.

But, though inflation is very low, and even negative in a few countries, something more must be going on, because commodity prices are falling relative to the overall price level. In other words, real commodity prices are falling.

As of Wednesday's close, the light crude oil futures of New York Mercantile Exchange fell by 2.48 in September and the future price of crude oil in October in London Brent fell by 2.07 .

Unemployment up. Housing values down. Equity markets down.

The price of meat dropped.

The price of rice has come down.

Steel prices fell from their very high levels starting in late 2004 early 2005.

Thus, for example, the price of cotton and timber fell ever lower, while the price of textiles and furniture soared.

This fall in recorded output was largely the result of depressed world prices.

Cotton prices had been falling since August 1997, and in February 1998 stood some 8 per cent below mid 1997 levels.

In fact, most dollar commodity prices have fallen since the first half of the year. Though a host of sector specific factors affect the price of each commodity, the fact that the downswing is so broad as is often the case with big price swings suggests that macroeconomic factors are at work.

Meanwhile, free trade negotiations seem to ignore historical trends. Developing countries international terms of trade have worsened prices of primary commodities have declined in relation to manufactures, as have tropical agriculture prices against temperate agriculture, and prices of generic manufactures have fallen relative to output protected by intellectual property rights.

A bit like inflation you over issue currency, you get what you see, declining prices.

And when they went IPO, their stock was at about 30 or 40 dollars and then plummeted, and it's never traded above 10.

The buffer stock purchases had helped to arrest falls in rubber prices, and sales had contributed to checking steep rises in prices.

Thus, with the exception of the prices of tropical beverages, in particular coffee and tea, the prices of the other commodities either declined or rose only marginally.

With international oil prices dropping by a whopping 40 per barrel since the summer this is an ideal moment for governments to introduce carbon pricing. Rather than let the consumer price of oil fall by that amount, governments should put a carbon tax in place.

In general, it appears that price increases have been levelling off and a decline cannot be ruled out in the near future.

In 1998, however, both groupings could be said to warrant additional resource inflows to compensate for the negative impact on the terms of trade of the fall in commodity export prices, owing in part to the continuing Asian crisis.

Falling prices and consumption, a consequent decrease in exploration, fall of kingdoms, the despair of ambitions, pride offended, bankruptcy.

The most pronounced declines in real terms were observed for all the major tropical beverages, coffee, cocoa, and tea.

Table 2 Developing countries with commodities experiencing price declines during June 1997 February 1998

Added to the price depressing factors is the expected continuing disposal of wool from Australia s stockpile.

The export earnings from agricultural commodities and raw materials for least developed countries are falling as prices decline.

All it takes to wipe out the bank s own money is a 16 drop in the house s price (from 235,000 to below 198,000). US house prices as measured by the S amp P Case Shiller National Home Price Index fell by more than 30 from June 2006 to March 2009, while European countries, including Spain, Ireland, and the United Kingdom, experienced similar or greater declines.

If anything, inflation is now falling further globally as commodity prices adjust downward in response to weak global growth. And gold is following the fall in actual and expected inflation.

The oil price goes through the floor. That company goes out of business, and then you can bring the oil price back up.

Moreover, excessive debt burdens continue to be a great hindrance to our recovery potential, especially in the light of escalating oil prices and the depression in commodity prices.

For example, the decline of metal prices was in response to the weakening of activity in the automobile and construction industries in the region.

As can be seen from table 1, the falls in the indices of prices were quite widespread, and affected both agricultural commodities and the metals.

22. The decline in timber prices has also been among the most pronounced, and reflected in the main the protracted weakness of demand in Japan (see table 1).

Nevertheless, it will require some adjustment for New Yorkers seeking to hedge their own real estate investments to sell futures contracts that have a built in price decline. They will have to get used to the idea that the market already expects the decline, and that they can protect themselves only for that margin of possible future price declines that exceed this expectation.

Object metaphors describe price movements as non living things, as in, The Dow fell like a brick.

Moreover, people nowadays easily imagine that the housing and farmland markets always move together, because prices in both boomed in recent memory, in the early 2000 s. But, from 1911 to 2010 in the US, the correlation between annual real growth of prices for homes and farmland was only 5 , and the latest data on farm prices have not shown anything like the decline in home prices.

And that's basically deflation 50 percent deflation.

The Price of Land and Houses falls

If the price remains at this level, it will have important implications some good, some bad for many countries around the world. If it falls further, as seems likely, the geopolitical consequences on some oil producing countries could be dramatic.

Now when the price of any technology declines that dramatically, the barriers to entry go down.

The outlook for 2005 is for a slowdown in economic growth as commodity prices decline but for a slight increase in inflation.