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Wednesday, 1 February 2017

Commodity prices up 55.7pc

Bounce!

Preliminary estimates from the Reserve Bank of Australia (RBA) revealed another 5.3 per cent increase in commodity prices in January 2017.

This follows on from an upwardly revised gain of a massive 8.8 per cent in December.

The index is now up by a rollicking 55.7 per cent from January last year thanks to soaring coking coal and iron ore prices, and is up by 43.6 per cent in Aussie dollar terms.

Commodity prices therefore remain way above their historical averages.


Spot prices for the bulk commodities - essentially coal - have pulled back a bit lately.

But even so, this is an unprecedented year-on-year gain for Australian commodity prices on this index, at least in SDR terms (in Aussie dollar terms there was a wild increase in October 2008 when the dollar nosedived).


We'll have to wait until Thursday morning to find out, but some market analysts have forecast a record trade surplus for December, perhaps totalling as much as several billion dollars.

Given that as recently as December 2015 we saw a record deficit of some $4.3 billion this would be beyond extraordinary as a turnaround.