MARKETS A-ND THE DEVELOP-I-NG-- COUNTRIE-Spubdocs.worldbank.org/pubdocs/publicdoc/2016/5/...Natural...

26353Volume 3 No. 4

COMMODITYMARKETS A-ND THE

DEVELOP-I-NG--COUNTRIE-SA WORLD BANK QUARTERLY

AUGUST 1996

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CONTENTS AND SUMMARY

SUMMARY PAGE 3 * PALM OIL PAGE 13Nonfuel primary Expanding supplies will put downward pres-

commodity SPECIAL FEATURE sure on prices.

prices rose 2.0%, * ARE RISING GRAIN PRICES THE START OF A * SOYBEAN OIL PAGE 14

led by large TREND? PAGE 5 Tight supplies and expected increases in

increases in bev- High grain prices have led to concern about world import demand keep prices aboveerages, grains, world food supplies. Are these concerns long-run trend.

and fats and oils. justified?

Metals and mill- GRAINS

erals prices MANAGING COMMODITY * GRAINS PAGE 14declined 2.0% PRICE RISK Prices rise sharply on concerns about the US

because of lower * USING RISK MANAGEMENT TO CREATE MARKETS wheat crop and low world stocks.

altmiiniiium and PAGE 7 * MAIZE PAGE 1 5copper pi-ices. The Mexican government used several risk US coarse grains are expected to recover

Petroleum prices management tools to phase in the transition from last year and lift world production to

rose 6.0%. to private risk managers. record highs, though stocks will remain low.

* RICE PAGE 15

FOOD Stocks are expected to fall for the sixth con-

* BANANAS PAGE 8 secutive year as production fails to increase

The recovery of prices is expected to increase enough to surpass consumption.

plantings in 1997. * WHEAT PAGE 16

* BEEF PAGE 8 Lower US production is offset by expected

Significant growth in US beef production higher production in other major exporters

resulted in further declines in beef prices. and importers.

* CITRUS PAGE 9CHANGE IN QUARTERLY Large exports from the southern hemi- AGRICULTURAL RAWAVERAGES, I Q96 TO 2Q96 sphere are expected in the last half of 1996. MATERIALSPercent

Nonfuel +2.0 * SHRIMP PAGE 9 A COTTON PAGE 16Food +3.9 Low supplies are expected to keep prices high. World production is expected to grow fasterBeverages +5 2 * SUGAR PAGE 10 than consumption.

Cocoa +11.3Mild coffee +6.4 Inventories are expected to build. * RUBBER PAGE 17Tea -0.5 Inventories slip as demand remains listless.

Fats and oils +5.3Grains +6.9 BEVERAGES * TIMBER PAGE 18Others -0.1 * COCOA PAGE 10 Consumption increases in Asian markets lift

Agncultural raw matenals +0.5Cotton -2.2 Prices rise as international traders try to Malaysian log prices.Natural rubber -3.7 secure supplies before the new crop year.Timber +4.4

Fertilizers +2.3 * COFFEE PAGE 11 METALS AND MINERALSMetals and minerals -20 Expectations of Brazil's large current crop * ALUMINUM PAGE 18

Aluminum -2.8Copper -3.7 are depressing prices, but Colombia's small Continuing weak consumption leads to priceTin +2.3 expected crop may hold back price increases. declines.

Petroleum +6.0-- -U* TEA PAGE 12 * COPPER PAGE 19

Prices stagnate for cut, tear, and curl tea but Fundamentals catch up with the market.

remain high for orthodox tea. * GOLD PAGE 20

Prices retreat from the highs of early 1996,

FATS AND OILS wvith weak demand and ample supplies.

* COCONUT OIL PAGE 13 * IRON ORE AND STEEL PAGE 20

High premiums over other oils may cause International steel markets are expected to

demand shifts to other oils. remain slow throughout the summer.

2 COMMODITY MARKETS AND THE DEVELOPING COUNTRIES

CONTENTS AND SUMMARY

FERTILIZERS were up 0.5%, with higher timber prices

* FERTILIZERS PAGE 21 largely offset by lower cotton and natural rub-

Prices are mixed, with urea and DAP lower ber prices. Weaknesses in copper and alu-

ancl TSP higher. minum prices dropped metals and minerals* POTASSIUM CHLORIDE PAGE 22 prices 2.0% during the quarter. Fertilizer

Prices remain steady as major suppliers cut prices rose 2.3% on strong demand induced

production. by higher grain prices and expanded area

* TSP PAGE 22 planted.

Tight world supplies and strong demand Grain prices were sharply higher early in

keep prices rising. the quarter but then declined. Very low lev-

* UREA PAGE 23 els of world stocks combined with concern

Prices slump after strong demand for spring about the size of the 1996 crop to keep prices

planting ends. volatile. Recent estimates putting the 1996

crop some 7.6% higher than the 1995 cropENERGY have eased concerns somewhat. Stocks* COAL PAGE 23 should build, although not enough to

Supply tightness could firm up prices. ensure adequate levels heading into next* NATURAL GAS PAGE 24 year. Prices are expected to remain volatile,

US prices are expected to remain firm this and further increases cannot be ruled out at

year due to low stocks but should fall in 1997 this stage.

with a much improved supply-demand Higher fats and oils prices were led by soy-

balance. beans, which followed grain prices higher.

* PETROLEUM PAGE 25 Coconut oil and palm oil prices were lifted by

Low inventories in the US strengthen the strong soybean oil prices.

market. Metals prices were jolted by news of large

potential liquidations of copper stocks from

COMMODITY PRICES Sumitomo Corporation of Japan. Over-* COMMODITY PRICE INDICES PAGE 4 supplies as well as changes in market senti-

* COMMODITY PRICE OUTLOOK PAGE 29 menit caused prices to tumble. Aluminumprices were also lower, on changing funda-mentals. The index of metals and minerals

prices has continued to decline since the108.5 peak inJanuary 1995 (1990 = 100). By

SUMMARY June, the index was 87.4, down 19.4% fromtheJanuary 1995 high.

The World Bank's nonfuel commodity The petroleum price rally that began withprice index rose 2.0% from the first to the the supply interruptions of the summer ofsecond quarter, while petroleum prices rose 1995 continued in 1996. However, prices

6.0%. This was the first increase in the non- peaked early in the quarter and then stayed

fuel index since the high reached in the first sharply lower for the balance of the quarter.quarter of 1995. By the end of the first quar- The index of petroleum prices wvas 10%

ter of 1996 the index had fallen 7.1% from lower in June than in April, suggesting an

that 1995 first-quarter high. Food prices were end to the rally. The April highs were near

up 3.9% during the second quarter, led by the highest levels seen since the Gulf War,

higher prices for grains (+6.9%) and fats and and prices remained relatively high even

oils (+5.3%). Higher coffee and cocoa prices after the recent decline. Low inventories arepushed beverage prices up 5.2% during the expected to keep prices firm in coming

quarter. Agricultural raw materials prices months.

AUGUST 1 996 3

COMMODITY PRICE INDICES

FIGURE 1. WEIGHTED INDEX OF PRIMARY COMMODITY PRICES FOR LOW- AND MIDDLE-INCOMEECONOMIES

PETROLEUM (SPOT) 1 NONFUEL COMMODITIESindex: curent US dollors (1990= 100) j Index. current USdollars (1990=100)50 :130

1125

1)20

110

90 V05

70 j494tll e.tz77i J10095

30 ~~~~~~~~~~~~~~~~~8583 84 85 86 87 88 89 90 91 92 93 94 95 96 1 L 83 0 4 85 86 87 88 89 90 91 92 93 94 95 96

r __ __ _ _ _ 83 84__

TOTAL FOOD > j METALS AND MINERALSIndex. current US dotlars (/990=100) | Index currentUSdollors(1990=100)

120 11

11990= 100

100

90~~~~~~~~~~~~~~~~~~9

80 7~~~~~~~~~~~~~~~~~0

70 60 r ,~

70 84 8.5 ~86 87 88 89 90 91 92 93 94 95 96 8386 586808899 19 93 94 95 9

TABLE 1. WEIGHTED INDEX OF PRIMARY COMMODITY PRICES FOR LOW- AND MIDDLE-INCOMEECONOMIES IN CURRENT DOLLARSl990~ =I00

Agnculture

Nonfuel Food Raw moterials Metalscommo- and

dities Total Total Grains Fats and oils Other Beverages Total Timber minerols FertilizersPetroleum (100.0) (69.1) (29.4) (69) (10.1) (124) (16.9) (22.8) (9.3) (28.1) (2.7)

Annual1993 73.6 91.6 99.1 98.6 93 6 1 11.5 90 7 84.9 1 10.3 152.4 74.0 83.71994 69.4 1 1 1.9 123.7 106.8 102.1 126 0 93.8 150.4 125.8 156 6 84.6 93.41995 75 1 122.3 13 1.5 1 6.9 120.3 136.6 98.8 152 0 135.2 139 5 101.6 103.6Quarterly2Q95 79.3 124.3 134 9 112.7 I 10.6 131.0 98.8 163.7 142.3 143.1 100.2 102 63Q95 71 9 120.5 128.0 1 19.5 128.4 136.1 100.9 145.7 126.0 138.4 103.7 102.64Q95 73.9 I 18.3 1 26.7 122.1 137.6 144.2 95.3 129 4 130.6 134.5 98.9 107.51 Q96 80.0 I 17.2 126.4 124 8 147.1 142.6 97.7 125.0 129.5 1 35.6 94.7 116.22Q96 84.8 119.5 130.3 129.7 157 2 IS0.1 97.6 13 1.5 130.3 141 4 92.8 1 18.9Monthly1995Jun 75.9 121.9 130.8 1 15 3 118.6 132 5 99.4 153 5 134.1 144.0 101.9 102.61995Jul 70.3 121.7 129.2 1217 127.8 138.5 104.5 145.0 127.3 141.8 105.0 10261995 Aug 72.0 121.5 128.7 118.2 125.4 134.2 101.0 152.9 124.4 138.3 105.6 102.61995 Sep 73.5 118.3 126.1 118.6 131.8 135.6 97.2 139.2 126.2 135 2 100.6 102.61995 Oct 70.5 118.1 127.0 121 7 140.3 141.2 95.3 135.3 127.8 135.2 97.6 103.81995 Nov 73.2 1 19.7 128 2 121.9 134.8 144.0 96.5 134.2 131.8 133.8 100.1 108.91995 Dec 78.1 117.2 124 9 122.7 137.6 147.4 94.0 1 18.6 132.3 134.6 99.1 109.81996Jan 77.8 1 16.0 124.7 123.3 143.2 145.2 94.2 1 19.8 130.1 134.6 94.8 1 13.41996 Feb 77.4 1 18.4 128.3 126 2 147.7 142.3 101.0 129.7 129 9 134.6 94.3 1 16.61996 Mar 84.8 1 17.2 126.3 124.9 150.4 140.2 98.0 125.4 128.6 137.7 95 0 118.71996 Apr 90.3 120.1 130.3 131.2 156.7 151.5 100.2 129.3 129.8 141 2 95.2 118.71996 May 83 3 121.3 131.7 130.8 161.3 152.0 96.3 134 4 130.9 142.1 95.9 1 18.71996 Jun 80.9 1 17.1 129.1 127.2 153.5 146.8 96.3 131.0 130 1 140.8 87.4 119.2Note: Weighted by average 1987-89 export values for low- and middle-income economies.Source World Bank, Intemational Economtcs Department, Commodity Policy and Analysis Unit


SPECIAL FEATURE

ARE RISING GRAIN PRICES SHORT-TERM DEVELOPMENTS

THE START OF A TREND? The short-term developments that led

Grain prices have increased sharply over most directly to the rising prices were lowthe past year. Prices of US grain exports world grain stocks relative to consumption at

soared from $112/ton in May 1995 to the beginning of the 1995/96cropyear (July

$204/ton in May 1996 for maize and from 1995) and the poor US harvest in 1995.$159/ton to $262/ton for wheat. Futures Stocks-the buffer between production and

prices more than doubled, with Chicago consumption from one year to the next-fellwheat futures rising from a low of to 13.4% of consumption after averaging

$3.50/bushel to $7.60/bushel in May 1996 18.8% in the previous five years and 22.3%

and corn futures rising from $2.55 in March during the 1980s. Such low stocks provided

1995 to $5.40/bushel in July 1996. Rice little buffer against the poor harvest of

export prices rose more moderately, from 1995/96 when world grain production fell$291/ton in May 1995 to $351/ton in May 3.2% from the previous year.

1996 for Thai 5% broken. A high level of speculative interest in com-Do these higher grain prices signal the modities by hedge funds and other investors

start of a trend or just a temporary bounce? may also have contributed to the price

Although it is always difficult to predict increases. Since the lows of the commodity

prices, the current situation was not unex- price cycle in 1993, commodity prices had

pected. As we reported in May 1995: increased significantly, drawing speculators

Several factors suggest higher grain into commodity markets to join hedgers andprices nextyear. Low stock levels will set the end-users, though it is difficult to know howstage for higher prices if poor yields or a much speculators alone contributed to thereduction in planted areas pushes produc- price increases. Large imports of coarsetion to below-normal levels. Sharply higher grains by China added to the perception offertilizer prices make lower yields a realpossibility. potentially large demand, although China's

Higher demand could further tighten imports did not in the end result in an over-market conditions as economic recovery all increase in world imports.extends from the United States to westernEurope andJapan, and as the weak dollar LONG-TERM CHANGES

reduces grain import costs for many Changes in government policy often fol-countries.... low economic events and that is what hap-

The combination of low grain stocks,high fertilizer prices, and rapid economic pened in agriculture during the 1980s. Asgrowth creates an explosive situation that world grain stocks rose to record levels of 465could'lead to sharply higher prices. Add to million tons in 1986-28.1% of world con-this the possibility, always present, that sumption-and prices fell to their lowestpoor weather could cause supply prob- level in at least 50 years, several of the majorlems, as well as the increasing size andinfluence of speculative hedge funds, and uthe grain market could be in the most reduce production. The US idled nearly 15volatile situation it has experienced in at million hectares of cropland under a 10-yearleast 15 years. (Commodity Markets and the program called the Conservation ReserveDeveloping Countries, May 1995, page program and additional cropland under16.) annual acreage-reduction programs. Total

Short-term developments and long-term pol- cropland devoted to grain production

icy changes combined to depress stock levels, shrank from 77.6 million hectares in 1981 to

and then, with lower than expected US pro- 59.5 million hectares in 1995-roughlyduction in 1995, prices rose to balance equivalent to a loss of 88 million tons of grain

demand and supply. production at 1990-95 average yields. The

AUGUST 1996 5

SPECIAL FEATURE

EU reduced land under cereals production Productioncontinuedtogrowatratescom-from 43.1 to 34.9 million hectares over the parable to those of previous periods, except insame period, whichi was equivalent to rough- the major exporters, as noted, and the formerly 40 million tons of grain production. centrally planned economies, whose produc-

Argentina, Australia, and Canada also tion fell precipitously as state-supported enter-reduced land devoted to grain production. prises were forced to operate withoutThe reduction was more a response of pro- government subsidies on fertilizer, fuels, andducers to low prices than a result of changing other inputs. Excluding those countries, glob-government policy, but the effect was the al world grain production grew 2.37% a yearsame. Combined, these countries reduced from 1980 to 1995; including them produc-cropland devoted to grain by 9.2 million tion grew 1.09% a year. From 1965 to 1980hectares from 1981 to 1995, which was equiv- world production grew 3.10% a year with thealent to 23 million tons of grain at 1990-95 major exporters and former centrally plannedaverage yields. Altogether, cropland devoted economies and 3.45% wvithout them.to grains shrank 35.4 million hectares among

the five major exporters, reducing produc- PROSPECTS

tion potential by roughly 150 million tons. Though recent price increases werePrices soared when production fell to 1,701 caused mostly by low stocks and a poor USmillion tons in 1995, compared with an aver- grain harvest in 1995, the conditions that ledage of 1,746 for the previous 5 years, and to this situation date back to US and EU pol-already-low stock levels dropped from 300 icy changes of the mid-1980s and to themillion tons in 1994 to 236'million -tbns in investment-discouraging low prices of the

1995, or tojust 13.4% of world consumption. 1980s. The potential for increasing produc-World grain demand did not increase sig- tion seems strong, however. Some of the

nificantly during this period and appears not cropland retired from production in bothto have been a major contributor to the the major exporting cotntries and the for-decline in stocks during the 19 80s or to the mer centrally planned economies hasprice increases of the past year. World grain already been returned to production thisconsumption grew just 1.2% a year after ris- year. Grain price increases have pusheding 2.97% a year from 1965 to 1980, mainly world cropland devoted to grain productionbecause of slower growth in demand in the to its highest level since 1986. Changes haveformer centrally planned economies of lifted some of the planting restrictions of the

Eastern Europe and Central Asia. Demand past decade. Still, a return to the big stock lev-also grew more slowly in developing coun- els of the 1980s is unlikely in today's world oftries. From 1965-80 to 1980-95 grain smaller budget outlays and less gov°ernmentdemand fell from 3.13% a year to 2.59% in involvement in agriculture. Such changesIndia, from 4.47% a year to 2.30% in China, seem firmly established in current govern-and from 5.25% a year to 3.37% in Indonesia. ment policies and are also mandated by the

Nor was pressure from rising imports recent GATT Agreement on Agriculture.responsible for the declining world stock lev- The future seems to promise smallerels during the 1980s or the recent rise in stocks and greater price volatility. When pro-prices. In fact, world grain trade declined duction falters because of bad weather, asfrom 214.7 million tons in 1980 to 201.8 mil- happened during 1995/96, prices will rise,lion tons in 1995. Rather than contributing though the extreme price increases of the

directly to the sharp drop in stocks, the stag- past few years will probably be the exceptionnation in grain trade contributed to the pol- once stock levels are rebuilt. But until stocksicy changes that eventually reduced stock return to more normal levels, prices couldlevels. continue to rise.


MANAGING COMMODITY PRICE RISK

USING RISK MANAGEMENT ilarly protected its budget allocation for

TO CREATE MARKETS the soybean marketing subsidy.

The Mexican Revolution of 1910 was anagricultural revolution that radically THE TRANSITION TO PRIVATE RISK MANAGERS

altered the role of government. The gov- Most agricultural support has been

ernment became the sole buyer and seller delinked from specific commodity pro-

of grain, the ultimate owner of natural duction levels in Mexico, but the market

resources, and the arbiter in disputes over for private risk management is still evolv-

land and resource tenancy. Trade and ing. To spur its development, ASERCA

other barriers, guaranteed prices, direct offers a program of delivering risk man-

and indirect subsidies, and directed credit agement services directly to producers.

increasingly displaced private decision- ASERCA offers a guaranteed price of 95%

making. Then, in 1989, with the National of the going marketprice for sorghum, soy-

Plan for the Modernization of Agriculture, beans, wheat, corn, and cotton using put

the cotntry began the task of creating pri- options. During the first year ASERCA will

vate markets. In doing so, the government cover two-thirds of the cost of the fees asso-

made use of several risk management tools. ciated with the put if the option loses value(otherwvise the producer that benefited

A MARKETER OF LAST RESORT from the hedge pays the full amount). By

When the state has been the sole agri- the third year the producer assumes all

cultural buyer, it takes time for market costs. This year ASERCA hedged 600,000

agents and the supporting markets for tons of cotton on behalf of producers.

credit, transport, and storage to emerge.Further, the pace of reforms can differ. INVENTORIES AS LINES OF CREDIT

During transition, producers need a mea- The severe devaluation of the peso

sure of trust that they will be able to market spurred inflation and led to tighter cred-their produce at competitive world prices, it. The sugar industry, facing nominal

but further state interventions retard the interest rates near 40%, developed andevelopment of private marketers. innovative program to ease inventory

The Mexican government moved from financing costs. Through the Organized

direct physical purchases, to marketing Trust Fund for the Sugar Marketpayments, to a delinked payment scheme. (FORMA), the industry arranged a $174

The marketing payments, used during million line of credit from Prudential

1991-94, were based on the difference Securities based on 400,000 tons of certi-

between a preseason government support fied sugar inventories. The six-monthprice and the price for imported com- loans are dollar denominated at LIBOR

modities. The government took on the plus 500 basis points. The loan allows mills

budget liability, and a government market- to meet their obligations for prompt pay-ing agency, ASERCA, hedged the bud- ment to cane growers without the need to

getary risk using US futures markets. immediately liquidate inventories. The

The Tamaulipas sorghum crop was loan is secured by FORMA-sanctioned

cross-hedged through the sale of Chicago warehouse receipts. Under the terms ofBoard of Trade (CBOT) corn futures the loan mill owners face the currency

contracts. ASERCA also hedged a mer- risks associated with further devaluation

chandising subsidy to the wheat milling of the peso but can offload that risk using

industry, again using the CBOT, and sim- the US currency futures market.

AUGUST 1996 7

FOOD

BANANAS 600 BEEF 280

t il ~~~~~~~~~~~~~~~~~~~~~~. ~~~~~~~196 19 -/ \~~~~ f~~~~~US cenLts/g NOV I N I\ I230450 Austraoar/New Zealand, 9

frozen, boneless,Iffl ..J f e , 4 (USdlolarslmt) - 85% chem,cal lean,

Central ond South ~~~~~300 c.If US, 80 85 90 95 1803* ! *f * ~Amencon, mporter's 80 85 90 95

*;lgil4w:> i ~(for), US porEs , 17

APR~~~~~~~~~~~~A9~~~~~~~~~~~~~~~~~~~9

1 _-FEXX 9996 6969||JUL1996 4D97E5CS 16890 JUN

95~~~~~~9

,, ~~~~~AVERAGE SECOND-QUARTER PRICE UP 41.6% PRICES PLUMMET AS US SUPPLIES EXPAND

FROM A YEAR AGO Expanding supplies of US beef pushedQ3 Banana exporters have avoided the mar- beef prices down during the quarter to 171

- _ _~~ ket gluts that sharply cut prices in the first cents/kg (85%o chemical lean, c.i.f. US port)half of 1995. Second-quarter prices averaged in July. Market fundamentals indicate that

$541 .8/ton, or 41.6% higher than a year ago. the season lows have been reached, butEcuador, the world's leading banana expansion in total meat supplies may contin-exporter, planned to convert 20,000 hectares ue to put downward pressure on beef prices.Of banana growing area to alternative uses. Escalation of feed prices has increased cowThe conversion plan anticipates substantial slaughter. Farmers are reducing their breed-compensation to banana growers for shifting ing herd in order to save on feed costs and toto other crops. generate some cash to offset the fall in calf and

The need for restraint in production may beef prices. US cow and heifer slaughter in thebe short term, given the growth of demand first half of the yearwas the highest since 1987.now under way in several East European and The herd reduction now under way willAsian countries where incomes are benefit- reduce US beef supplies in the long term.ing from economic reforms. Banana han- The continued significant growth in USdling facilities are being installed in Eastern beef production has had an important impactEurope to improve the quality of the fruit on world beef markets as the US shifted fromdelivered to, consumers. For example, ship- net importer to net exporter of beef.ments through Germany to Slovakia- Australian beef exports to the US are downpredominantly bananas-increased by one- 26% from last year, now that US domestic sup-third between 1994 and 1995. Although the plies of beef are more competitively priced.

balance between production and demand Competition has also been fierce in othermay be unstable for short periods, the inter- Asian markets, especially Japan and theest in African and Latin American countries Republic of Korea, where the increased avail-in increasing production for export indicates ability of US beef has resulted in losses of mar-that ample production will be available to ket shares for traditional exporters such asmeet demand growth. Australia and New Zealand. They have made

The World Trade Organization appoint- up some of these losses, however, because of

ed three members to its dispute panel to continued demand growth inSoutheast Asia.investigate US and Latin American banana However, Japanese demand for beef, whatev-producers' challenge to restrictions on "dol- er the origin, has been dampened by the pub-lar" bananaimports in the EU banana import licity over mad cow disease, and beef prices

regime. A report is expected in six months. have reflected this fall in demand.


FOOD

CITRUS SHRIMP 13 5

ORANGES -11I14 55

686 72 JULUSdlang

9586L Gubroues . 80 85 90 95headless, 26-30

\ 564 24 560 73 \ count per pound.NOV JUN wh~~~~~~~~~~~~~olesatle Noe~ York /4 15

Dato not available JUN95 96 forJune 1995. / N96

450 (US dolaorslmtJ )1SEPMediterroneon, naiel, 95 A.98

300 EU import price. c 9 f JAN- ~~~~~~30Pons 9

80 85 90 95

SOUTHERN HEMISPHERE CITRUS PROSPECTS ARE WITH SUPPLIES LIMITED, PRICES REACH RECORD

LOOKING UP HIGHS IN SECOND QUARTER

The average indicator price of fresh Shrimp prices have been increasing since

oranges, at $489.3/ton during the first half January. Low supplies from Asian producing

of 1996, is only slightly lower (-1.7%) than countries and the US shrimp embargo kept

a year earlier. The fresh citrus season began prices rising during the second quarter.

during the quarter in South America as Landings in the US Gulf area have continued

major northern hemisphere supplies were to decline in recent months, and expecta-

dwindling. Large export supplies from tions of low supplies from the northernSouth Africa are expected later in the year. Atlantic region also boosted prices. Prices

Argentina and Uruguay are the primary averaged $12.03/kg in the first quarter and

suLppliers to continental Europe during the $13.66 in the second.

summer season-from April to the end of Farmed shrimp production has been at

September. At this early stage of the season low levels in recent months in several Asianorange production is encouraging, with the producing countries. US shrimp imports

size and quality of navel oranges parti- from Asian countries were lower in the first

cularly promising in Argentina and four months of this year than in the same

Uruguay. period last year. China, India, Malaysia, theCitrus exports from South Africa are Philippines, and Thailand accounted for

expected to rise significantly in the second most of the decline. Asian shrimp supplies

half of 1996 following improved rainfall and are expected to remain low in the secondhigher production from plantings in the late half of 1996. Yields from Asian aquaculture

1980s. Transport from the region is improv- are also on the decline. The market for

ing after rehabilitation of the Mozambique medium and smaller sizes, currently in shortports at Beria and Maputo, with support supply, will remain firm. Larger sizes will

from Zimbabwe citrus growers and the gov- also be in short supply.ernments of South Africa and Mozambique. Expectations about the US Gulf domestic

Access to those ports will reduce shipping white shrimp season and the seasonal upturn

time and transit costs to Europe and the in demand during the summer months also

Middle East. Orange prices may weaken if influenced market developments. Consumers

the Southern African orange crop meets the resisted the high prices and shifted to alter-

current forecast and if exports to Europe native protein sources. These demand-side

and the Middle East begin in late summer, factors, combined with expectations of the US

before South American shipments have Gulf shrimp season, resulted in some price

ended. declines inJuly.

AUGUST 1996 9

FOOD

SUGAR j0 COCOA 15375

-; (Uw,fr.6,stowed cei e l (U5centshE JUN- 29 96 (Url.SA cen pnc 96

JUL rawn fo.b6 stowed 35- 95 Caribbean poits 20 UC al picn

Igi 80 85 90 95

gY 2846 80 85 90 9510oo

:t- \ M9A~~~~~~~~~~~~~~~6" 143 50

145.7 XvD \ ~~~~~~~~~~~~~~~JUN 145 7Raw

1990 100 164

131.5 - MAY 961996 96Q2

STOCKS EXPECTED TO GROW PRICES RISE ON CONCERNS ABOUT FUTURE MARKET

The U.S. Department of Agriculture DEVELOPMENTS1995

- *r"25o raised its estimate of world sugar consump- Cocoa prices increased 12% between the1996 ; tion for 1995/96 by nearly 1 million tons to first and second quarters, mainly because of

119 million tons and expects consumption in concerns about tightening supplies before1996/97 to grow to 120 million tons. Still, the 1996/97 crop becomes available. These

stocks for 1995/96 are expected to reach concerns led to a significant increase in thenearly 22.6 tons, the second consecutive year September futures contract price in London

of increase. Record crops in Brazil, India, when a major trading house purchased

Mexico, and Thailand have helped supplies September futures contracts equivalent tooutstrip demand. Restrictive export policies about 300,000 tons in order to secure cocoa

in India and elsewhere have kept some sup- prior to the new crop year. In mid-March the

plies off international markets. Further, the September futures contract was trading atUS quota was increased another 150,000 tons around £15 below the December contract,

and now stands at 2.17 million tons, the high- but by mid-June itwas trading at£75 above it.

est in six years. For next year USDA is fore- Concerns about the availability of cocoa

casting a slight reduction in US production before the new crop were raised in mid-

from 6.7 to 6.5 million tons due to frost dam- March, when the government of C6te

age in Louisiana and continuing decline in d'Ivoire announced that it will not allow

cane area in Hawaii. exports of the 1995/96 mid-crop. However,The Mexican Sugar Chamber is expecting by early June there were reports of some

production to reach a record 4.45 million exports of the mid-crop.

tons, far outstripping estimated demand of Concerns over the short-term availability

4.1 million tons. Access to the US market will of cocoa persist despite the current largeremain limited during the early years of crops in C6te d'Ivoire and Ghana and the

NAFTA, so most of the surplus will end up on resumption of growth in cocoa productionthe international market. in Indonesia, which resulted in record world

Elsewhere, Cuba plans to repeat this sea- production for 1995/96. Most analysts have

son's experiment in foreign-based prefi- revised their estimates for 1995/96 to show

nancing for its 1996/97 sugar crop. Input a small surplus instead of a deficit. As the

financing is expected to grow from this year's beginning of the new crop year approaches,

$126 million to $150 million. Credits helped analysts are gradually shifting their attention

reverse the long-term decline in sugar, which to the early prospects for the 1996/97 crop.

dropped from nearly 7 million tons in the Preliminary reports are for a smaller and

1980s to 3.3 million tons in 1994-95. later main crop in C6te d'Ivoire in 1996/97


FOOD

than in 1995/96. Estimates put the 1996/97 COFFEE 530

main crop at around 800,000 tons. But these A337 77

early estimates may not be very reliable. This 95

time last year, early estimates put Cote 3212 80 85 90 95 130

d'Ivoire's main crop at around 850,000 tons; 95 \ ce,W,o),nd,cato, price, other

mfld crobico, New Yorkit came in at 970,000 tons. What seems more eedBremerVHomberg

certain, however, is that next year's Ivorianand world cocoa production will not 276.59

exceed-or even match-this year's. And 96

that would mean a high likelihood of adeficit for 1996/97 and, therefore, of high-

234 22er prices. DEC95

How high can prices go? Historically,prices have been more variable and likely to EXPECTATIONS OF BRAZIL'S LARGE COMING CROP

rise significantly whenever the stock to grind- KEEP PRICES LOW

ings ratio has gone below 30-35%. Inter- World coffee prices have been relativelynational Cocoa Organization statistics put steady for the last three quarters. The marketthe stock to grindings ratio at around 45% at faces a tight supply situation because of lowthe end of the 1995/96 crop year. If the exports from Brazil following the weather-1996/97 crop matches the previous year's, damaged 1995/96 crop-two frosts and aand grindings increase at last year's rate of drought. However, the market expectsabout 3-4%, there will be a deficit of about Brazil's current 1996/97 crop to be fairly100,000 tons and a stock to grindings ratio of large-estimates range between 23 and 27.539%. The huge stocks accumulated during million bags-which is a major price-depress-the late 1980s and into early 1990s have ing factor.declined significantly, both in absolute terms Brazil's 1995/96 crop, estimated at aroundand relative to grindings, so any future sup- 15 million bags, was far smaller than usualply disruption could cause prices to soar. demand, which is about 28 million bags (18

It has become increasingly evident, at million bags for export and 10 million bagsleast in the near term, that production for domestic consumption). Despite releasesprospects in C6te d'Ivoire, Ghana, and of government stocks, Brazil's exports ofItndonesia will determine to what extent 500,000 to 600,000 bags in recent months areworld production will be able to meet world more than 30% below those of a year ago. Forgrindings. Brazil has been experiencing the six months ending March 1996, Brazil'sproduction difficulties for some time and exports were down about 3 million bags. Theoutput has been declining steadily. With recent shortfall in world production was metlocal consumption and grindings increasing, mainly by drawing down stocks in both pro-Brazil has been exporting significantly less ducing and consuming countries. Stocks incocoa. Output is also down in Malaysia; today producing countries are estimated to haveit is half of what is was three to four years ago. declined about 9 million bags and those inHowever, some analysts predict that higher consuming countries about 10 million bags.world prices would eventually lead to the Levels in consuming countries are consid-recovery of Malaysian production. ered to be barely enough for working stocks.

C6te d'lvoire's new electronic trading sys- Market attention is now focused on thetem started operating on May 2. Although 1996/97 crops in Brazil and Colombia. Indetails of transactions are not publicly dis- April USDA revised its estimates of Brazil'sclosed, it seems that routine sales are being coming crop to 27.5 million bags, up from itstransacted on a regular basis. December estimate of 25.5 million bags.

AUGUST 1996 11

FOOD

However, Brazil's coffee cooperatives vigor- TEA t 79.87 UScenWg)DEC ndonacuos

ously dispute this figure, saying the crop is 95 average for oil tea

likely to be only 23 million bags. Other pri-vate estimates put the number between these

two figures. Even if the USDA's latest esti- 17i.22

mate is correct, Brazil's exports are likely to 16866 96

be less than 17 million bags, below its usual 96

exports of 18 to 20 million bags.An important factor in evaluating Brazil's 350

future exports is its domestic demand.Brazil's roasters association estimates domes-

tic consumption at 12 to 13 million bags for JUL E 85 90 95095 8 90 9

1995/96, up from 11 million bags the year

before. Reasons cited for the sharp increase DEMAND FROM RUSSIA AND INDIA STRENGTHENS

are improvements in quality, higher PRICES

incomes, and a dramatic drop in inflation. Average tea auction prices in London

Colombia's 1996/97 crop, to be harvested remained stagnant during the past quarter.during the fall of this year, is expected to be Prices tend to be low at this time of year

considerably smaller than previously estimat- because of reduced demand in Western and

ed because of continued rain since Decem- Eastern Europe. Prices in London reflectber. The crop could be as low as 10 million mainly teas used for tea bags-CTC (cut,bags, or 30% lower than the previous year's tear, and curl) teas-rather than orthodox

crop. Resistance to abnormal weather has teas. Stagnant CTC prices are also caused bybeen weakened because of the poor care cof- large production increases in the main CTC-

fee bushes received in recent years when real producing countries, India and Kenya. In theprices were low. first five months of this year India produced

The Association of Coffee Producing 179.7 thousand tons, well above the 159.8

Countries (ACPC) has decided to continue thousand tons during the same five monthsits quota system until the end of July, but its of 1995. Kenya produced 116.4 thousand

future is uncertain. There are no penalties for tons, up froml05.9 thousand tons last year.

exports above the agreed quotas, and non- In contrast to CTC teas, orthodox teas have

members such as Mexico and Vietnam create been trading at around $1.85/kg in recent

a free-rider problem. It is doubtful that the months in Colombo, Sri Lanka auctions, up

system will be effective in raising world coffee from$1.40/kg during the first four months of

prices. This skepticism among coffee traders 1995. The high price of orthodox tea reflects

in consuming countries is shared by traders in high demand from a number of countries

major exporting countries such as Brazil, including Egypt, Pakistan, Russia, and SaudiColombia, and Indonesia. Arabia. Russia's imports rose strongly from 83

With expectations of lower prices a num- thousand tons in 1994 to 135 thousand tons

ber of countries are jockeying for position in in 1995. Now that Russians are free to importthe gourmet market. Colombia's National any kind of tea they want, orthodox tea from

Federation of Coffee Growers is considering India and Sri Lanka is in great demand.the creation of a framework for increased These recent developments suggest that

sales of specialty coffee, including proce- orthodox tea prices could stay high relative to

dures for including sales for small roasters. CTC tea prices because demand from

Guatemala's coffee association, ANACAFE, is Pakistan, Russia, and the Middle East forencouraging growers and traders to improve orthodox tea is expected to increase consid-

quality. erably more than demand.


FOOD

COCONUT OIL 8,700 PALM OIL 800JUN ~~~~~~~FATS AND

(US dollcrs/rt) 655.00 OoPhiippines/lnoneson. JUL OILSbulkl c, f Routerdor9 Fats and oils

/ \ _^-200 Fats and oils~~~~~~~20750.00 } \80 85 90 95 prices rose 5.3%NOV 95 /\_because of high-

er copra,693 00 / 711 s58600 coconI1Ut oil, -palm

JUL 711.00 ~~~~~~~~~~~~~~~~~SEP95 JAN 9J AN oil, and soybean

96 - .200

oil prices.SEP -700

95 (US dolbrs/mt) 519 00 1990 5100 .Mole ysicn. 5% bulk, 96 JUN 1996

80 8 90 95 200 cif NVWEurope 96 Q2

144.2

SHARP DECLINES IN SUPPLIES SEND PRICES OUTLOOK IS BEARISH FOR EXPANDING WORLD PALM

UPWARD OIL SUPPLIES

Export supplies of coconut oil from the World palm oil production is projected to 142.6

/996Philippines declined sharply during the sec- rise nearly 5% to a record 16.5 million tons Q/

ond quarter. Prices (c.i.f. Rotterdam) aver- in 1996/97. Though still below the average

aged $783.7/ton, up from $7 24/ton in the growth for the past five seasons (0.9 million /1995

first quarter. Despite an expected seasonal tons), the increase is the largest among all Q3

recovery in export supplies in the third quar- vegetable oils. Palm oil is also expected to

ter, total Philippine exports for the year experience the largest growth in world veg-(October 1995-September 1996) are project- etable oil supplies (around 1.0 million tons),

ed at 1.0 million tons, or 14% below a year followed by soybean oil (0.5 million tons).

earlier. Most of the increase is expected to occur in

Consumers are substituting ethylene (a Indonesia (0.5 million tons) and Malaysia

synthetic petroleum-based product) or palm (0.1 million tons).oil for part of their coconut oil demand. The World import demand will resume its

high premium of coconut oil over other veg- long-term uptrend in 1996/97. Sinceetable oils remains, however. Further shifts 1984/85 world imports of vegetable oils have

toward other oils during the third and fourth declined only in two periods: 1990/91 andquarters, as well as significant improvements 1995/96. Following the sharp decline ofin the supply situation, should result in a nar- almost 1.7 million tons in 1995/96, world

rowing of coconut oil premiums. But with import demand is projected to increase 1.4

prices for softseeds expected to be firm, there million tons, to 30 million tons in 1996/97.

will be little room for a downward drift in the Chinese imports alone will account for more

prices of coconut oil and other lauric oils. than half of the total increase in worldPhilippine exports of coconut oil declined imports. Import expansion is also projected

sharply to 430,000 tons for the first half of the for other Asian countries and the EU.year, down 41% from the same period last Palm oil production is expected to cover

year. Exports to Europe were more than the bulk of the increase in world import

halved, to only 52,000 tons, reflecting sharp demand. World exports of palm oil are pro-declines in demand in response to the high jected to rise to a record 11.7 million tons,

prices in recent months and the wide premi- thus covering almost two-fifths of total world

uns over other edible oils. Europe and the import demand for all vegetable oils. The

Republic of Korea were also affected by the record stocks and the further large increase

40% drop in Philippine export supplies of in production will allow palm oil to meet

copra meal inJanuary-May. most of the demand increase.

AUGUST 1996 13

FOOD

SOYBEAN OIL GRAINS63800

626 00 S (US dolJarVmt)JUL5 Dutch, crude. PRODUCTION TO INCREASE, BUT PRICES TO REMAIN

fob ex-mAlVOLATILE

Grain production is expected to rise

\d about 7.5% this year according to the*!1.IOC@L. -, USDA's June forecast. The Food and Agri-

*a;lz-i. 157.2 culture Organization's (FAO) May/June

v [ * effl 800 \ yZ 56400 forecast was slightly lower at 6.5%. In both

y)96N cases world grain stocks would increase

SrS | = 538 00 slightly, but not enough to preclude further1996 200 MAR price increases next year if production prob-Q I 80 85 90 95 96

lems recur. Global stocks will remain near

1995 OIL PRICES DECLINE ON WEAKER WORLD DEMAND 14% of total use by the end of the currentBUT REMAIN ABOVE LONG-RUN TREND crop year (June 1997), the second lowest on

FQ4 . . -Soybean oil prices declined during the record following the 13.4% ratio at the end

_- second quarter because of weaker world of the 1995 crop year. With this background

import demand and expanding supplies of it seems likely that grain prices will remain

vegetable oils. Soybean oil prices averaged volatile until at least this time next year,

$579/ton, up from $547/ton in the first when a large harvest could rebuild globalquarter. Prices remained above their long- stocks.run trend, and bullish supply and demand Most major grain producers are expect-

fundamentals for soybean complex during ing good harvests, with the exception of the

the second half of the year should keep US, which had a poor wheat crop. Severe

prices above their long-run trend. drought in the midwest and southwest dam-

Several factors contributed to the bullish aged the US winter wheat crop, which was

outlook for soybean complex. US stocks of 5% smaller than last year's. Other major

soybeans are expected to fall to 31 million exporters are expecting large harvests and

tons by March 1997, well below the 37 mil- some rebuilding of stocks. High import

lion tons during the same period in 1995. prices and adequate harvests in the major

World stocks of oilmeals are projected to importing countries should keep trade lev-

decline sharply, to an estimated 5 million els low. However, large harvests-other than

tons (from 6.3 last year), with soybean meal the US wheat crop-in the major grain

accounting for virtually all of the decline. exporters should allow exporters to rebuild

World vegetable oils stocks are also expect- stocks.

ed to decline sharply by the end of next sea- Producers responded to the high grain

son, to about 10 million tons. Rising Chinese prices of the past year by increasing grainimports should fuel a reversal of the declin- area to its highest level since 1986. The US

ing trend in world import demand for and the EU introduced policy changes as

oilseeds, oils, and meals in the second half of well. The US eased acreage reduction

1996. requirements on the 1996 crop, and a new

A recovery in soybean yields in Brazil, farm bill removes most planting res-

China, and the US should boost world pro- trictions for the future. The EU reduced its

duction about 8% above last year's. Most of set-aside requirements, which allowed area

the increase will go to rebuilding the low soy- planted to grains to increase. Market

bean stocks carried over from the 1995/96 responses have also been strong, with

season. The outlook is for low stocks through higher grain production expected in many

the end of the 1996/97 season. countries.


FOOD

MAIZE RICE 475204 02 MAY 382 60

150 96 OCT 325

J 80 85 90 95 90 95- ~~~~~~~~~~~~~~~~96s0

80 85 90 95

345 60JUL 34: 50

95 ~~~~~~~~~~~~JUN143 95 96NOV95 340 50

NOV> US dolloa/mnt) 95lS no 2 yellow

126 99 fo.b Gulfports (US doll5or/mr) 3

/26 99 Thoa, 5% broken. white, 32720JUL ,ndicouve maket sunvey APRJ95 pnce, fo.b. Bangkok. 96

PRICES REACH RECORD HIGHS MARKET TO REMAIN TIGHT

Maize prices rose sharply throughout the Rice prices fell to a quarterly average of

quarter, and US export prices averaged $333.6/ton for Thai 5% (indicative price),

$197.3/ton-well above the $113.7 during down 8.8% from the previous quarter. Thai

the same quarter of 1995 and last quarter's 35% broken rice fell 12.5%, to $272.6/ton, as$168.6. Futures prices rose to more than demand for medium- and low-grade rice

$5.00/bushel as concern over the US crop weakened on lower import demand from

continued. The US crop accounts for 30% of Indonesia and continued large exports from

world production and two-thirds of world India.

exports. Despite the concern, a large US crop Despite a record level of world produc-

still appears likely, which should significant- tion, consumption increases are expected to

ly ease the price pressure and rebuild US and reduce world stocks. Trade should remain

world coarse grain stocks. Current estimates high, but probably not as high as in 1995.from both the USDA and the FAO call for a The decline in prices despite the projected

record world coarse grain crop. decline in stocks could be temporary if pro-

The US coarse grain crop was plagued by duction fails to exceed current estimates.

wet planting conditions, which delayed The global stock-to-use ratio is projected to

planting and threatened yields. Conditions fall for the sixth consecutive year in 1996/97in other major producing countries have to its lowest level since 1972/73. This leaves

been more favorable, and a record world very little margin for error, and prices could

crop is projected. World stocks are expected be high for the balance of the year. Highto rebuild slightly, but still to remain low rel- wheat prices also mean little possibility for

ative to historical levels. Trade levels are not substituting wheat for rice imports

expected to surpass last year's levels and Brazil, Indonesia, Iran, and the Philippines

should remain near 90 million tons-the low are all expected to import a million tons or

end of the range over the past 10 years. more during calendar 1996 according toChina has been a major exporter and recent USDA estimates. The five largest

importer in the coarse grain market for the exporters in 1996 are expected to be Thailand

past several years. China was the world's sec- (with exports of 5.5 million tons), India (3.0

ond largest exporter in 1992/93 and million tons), the US (2.7 million tons),

1993/94, with about 14% of world trade. It Vietnam (2.2 million tons), and Pakistan (1.4

became a net importer in 1994/95 and million tons), according to USDA estimates.

1995/96, with imports accounting for 4-7% of China is expected to have a near-record

world trade. China is expected to remain a net crop of 185 million tons (paddy) and to be a

importer in 1996/97. net importer of about 0.5 million tons.

AUGUST 1996 15

FOOD

WHEAT COTTON262 It 5

(US doflorsImt) MAYUS, I Hard Red V96nter_ SEPGufpot prompt shipment, 95 I.7

80 85 90 95

fct^;J"gel;t:^ls3A{fTcl,¢_ | ~~~ ~ ~~ ~ ~~~~~~~~~~~~~~~9JU5 ¢ LJ(S centskg

22734 Index, cO t LerpookMarket-year-ending stocks s %s 96 and Furope

of consumpuon 29 _7 75

24.5 5JU AUG JUNi9829/89

20.1 18445 182501992/93 AUG 8 o A9P6R

95 80 85 90 95 9

11 298 17 1 U r 1996/97 RECORD PRICES BEGIN TO EASE RECENT US POLICY CHANGES MAY LOWER COTTON980/8-

14.8 Wheat prices rose sharply during April PRODUCTION1983/84 and May before declining injune. US export World cotton production is expected to

_1995/6 prices averaged $249.0/ton for the quarter, reach 19.6 million tons while consumption

up from $213.7/ton the previous quarter. will reach about 19.1 million tons, increasing_ = = _ Prices were 56% higher than during the stocks by 500,000 tons according to the

|Market-yeor-endmng stocks as % same quarter last year. Importing countries International Cotton Advisory Committee

S7 7 1 9884/85 paid even more because the major exporters (ICAC). ICAC also reports that both world17 1 10i97.Q eliminated their subsidies. cotton production and consumption are like-

1990/91

Estimates put wheat production some 4% ly to continue upward during 1997/98, withto 8% lower than previously expected. USDA consumption reaching a record level.

projects a 7.8% increase, while FAO projects Production is likely to exceed consumption,

a 4.4% increase. The US crop was down 5% resulting in a further increase in ending

1984iw from last year because of drought conditions stocks. A major portion of this increase inin the major wheat growing areas of Kansas stocks (estimated at 400,000 tons) is likely to

1U4 and the southwest, though excellent spring be absorbed by China, which along withwheat crop conditions promise good har- Brazil, Turkey, and other major producing

vests. USDA is predicting that the combined countries has become a significant cotton

Market-year-ending stockss% output for the other major wheat exporters importer.of consumption such as Argentina, Australia, Canada, and The medium staple cotton indicator price

1985186 the EU countries will be 12% higher than last (Cotlook A index) was remarkably stable

year's, or more than enough to offset the around an average of 183<t/kg during April/

/ 27.3 decline in US production. June 1996-22% lower than in the same peri-1992/93 With good wheat crop prospects, major od of 1995. Given that a substantial stock of

256 importers such as China and Russia are cotton from Central Asian origins, including995/97 expected to import less wheat than during Azerbaijan and Tajikistan, has still to be sold,

I989/90 1995. Morocco is expected to reduce imports a revival in mill demand in the major import-

as production recovers from last year's ing markets seems no closer. Thus the persis-7995196 drought-damaged levels. India, a nontradi- tent weakness in the New York futures market

Note Datafor 994/95 and 1995/96 tional exporter, is expected to remain a sig- that has depressed December 1996 contractsare estimatedSource USDA, FAS nificant exporter for the second consecutive to as low as 76¢/lb shows no prospect of let-

year. Total imports are projected to fall to 92 ting up. Futures may come under further pres-

million tons, down from 94.5 million tons last sure if Washington's assessment of the area

year. If this forecast materializes, prices should sown in the US proves to be higher than antic-trend downward over the balance of the year. ipated earlier.


AGRICULTURAL RAW MATERIALS

The tendency of spinners to hold a toler- RUBBER 170163 60 i Up 0.5%, the

able view of forward cotton prices has been DEC 2 0

confirmed in the face of the persistent weak- 0 t2 ndex ofnagricul-ness in New York futures market. On the . 85 90 tural raw materl-other hand, new crop futures will depend on als was nearlyWashington's assessment of area sown in the Hichanged.US. This assessment is being closely moni- g cottontored by market participants since the JUN and natural rub-

demise of the old system of deficiency pay- JUL ber prices werements to US cotton growers (difference offset byplowerbetween market price and price received by (UScenm/ktb

farmers), which had caused US area allocat- AUG promptdel/ery 1990 = /00 /30.3

ed to cotton to rise an average of 217,00 9 fob Klo mpor1995 ~ Q2

hectares per season. Beginning in 1996/97 PRICES SLIP Q4

farmers who had received government pay- Natural rubber prices slid during the sec- /295

ments in the past can plant anything they ond quarter of 1996, and supplies appear to / 996

want (except some fruits and vegetables) and have slackened in response. Still, inventorieswill receive fixed payments. This new policy continue to decline. With forvard markets in

is likely to reduce cotton area. backwardation, industry analysts say that /26.0/ 995

The global reduction in tariffs under many consumers remain on the sidelines. Q3

Uruguay Round agreements will signifi- In response to last year's exceedingly

cantly alter the pattern of trade between attractive prices, supplies from Malaysia and

countries and put downward pressure on Thailand gr-ew rapidly, but they have recenit-

yarn prices. Furthermore, the recent down- ly slowed. By contrast, in Indonesia produc-ward revision of forecasts of economic tion increases have been steady andgrowth in the EU appears to have taken consistent, with year to year increases ofaway an early recovery of textile market 2.1%. Malaysian production grew at 25.2%activity in Europe. and 2.6% for the first two quarters of 1995

Although official Chinese statistics report- and then contracted during the last two quar-ed a decline of 660,000 hectares in the area ters to end the year flat. The composition of

sown to cotton, reports from Chinese cotton the Malaysian market continues to evolve

producing provinces dispute the official toward an industry dominated by smallhold-statistics, implying that cotton area may in ers, with estate production shares declining

fact have remained unchanged. Plantings to about 22% of production.

have been completed in many districts in In Thailand significant production growthIndia, where sowings have registered an has been matched by demand growth, leaving

increase of 5% over last season. In Pakistan only marginal increases in exports. Last yearand Turkey the 1996/97 crop continues to production grew 4.5%, but domestic demandmake satisfactory progress under favorable grew avoracious 13.5%, so expolt growth was

weather conditions. Good weather condi- insignificant.tions also prevail in South Africa. The As estimates of first-quarter end-use begin

1996/97 crop in Mexico and in Central and to roll in, it appears that the 17-day strike atSouth America is progressing normally. GM badly affected car and truck production

Except for Texas, all US cotton producing in the US. The strike put new car and truck

regions have made good progress. production levels significantly below lastThese projections suggest a continuing year's already low levels, adding lackluster

mild decline in cotton prices in 1996/97 end-use demand to an already slack USdespite an increase in consumption. market.

AUGUST 1996 17

AGRICULTURAL RAW MATERIALS

TIMBER ALUMINUM 3000

261 65LOGS M 88832259 57 96AU2,0JUL 995

25585 1,8600(US do

3JUN . UL (US dollor/mmt)

\ > ~~ ~ ~~ ~ ~~~96 95 L ME. pramrry ingors.\ / \ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~highgrode, cas

Mdaysvon, mercnto, soespoce by !mpote~s, Tokyo

-- 2t ~~400 3~

221 73 N1,48248SEP I 9695 80 85 90 95

MALAYSIAN LOG PRICES CONTINUE THEIR RECOVERY STOCK BUILDUPS AND WEAK CONSUMPTION KEEP

Malaysian log prices in the Japanese mar- PRICES MOVING DOWNWARD

ket continued their recovery during the sec- Aluminum prices declined further duringond quarter due mainly to an increase in the the second quarter as inventories mountedconsumption tax in Japan and to rising log and consumption remained weak. Europeanconsumption in log-producing countries. In consumption is projected by several analysts

Japan the consumption tax rate will increase to grow about 1% during 1996, well below thefrom 3% to 5% by April 1, 1997, leading to 3% in 1995 and 12% in 1994. Reports indicatean increase in housing demand and so in tim- that orders for aluminum are weak. Prospects

ber demand. The consumption trend for for growth in aluminum consumption are bet-tropical logs is declining, however, with the ter in the US, where output growth rose fromincreased use of softwood in plywood and 0.6% in the last quarter of 1995 to 2.7% in thelaminated lumber. Demand for tropical logs first quarter of 1996 and consumer spendingfrom Southeast Asia declined from 6.85 mil- rose from 1.2% to 3.5%. Growth in new home

lion ml in 1994 to 5.93 million m3 in 1995 sales and aircraft orders more than offsetand is expected to decline further to some declines in motor vehicle production, stimu-5.5-5.7 million m3 in 1996. lating aluminum consumption. The strongest

Reports indicate that Cameroon, growth in aluminum consumption for 1996 isEquatorial Guinea, Gabon, and Ghana, expected in Asia, with consumption in Chinaamong other African countries, have been projected to grow at around 7%. In Easternincreasing their log exports to Asian destina- Europe and the countries of the former Soviet

tions. Asian countries have also started to Union, consumption is recovering, but frominvest in the forestry sectors of African coun- a relatively low base. Consumption in the

tries. Analysts predict that Africa could countries of the former Soviet Union is pro-become a regular supplier of logs and timber jected by some analysts to grow at aroundproducts for Asia. 8-9% in 1996.

Despite stagnant timber markets in Production of primary aluminum in-Europe, including the UK, Malaysian sawn- creased from 1.37 million metric tons duringwood prices in the UK market showed some January-May 1995 to 1.48 million metric tonsincrease during the second quarter, mainly during the same period in 1996. Productionbecause inventories were low after bad is projected to continue to rise smoothlyweather in the producing regions of Asia throughout 1996 as new and expandedreduced supplies. A sustained rise in prices capacity comes on-line and idle capacity iswill depend on a recovery in the European restarted during the second half of this year

demand for timber products. and into the next.


METALS AND MINERALS

COPPER 3.000 separate offices for settling trades and the -YThe index of(US dollarsom_ rotation of key personnel.LIl.11""2" 2athoenmetals anid nmmi-Ul/ltcanvdre shapes, 2.100 The primary effect of the fall in LME cop- erals pie fell

etde.ent p .c.e erals prices 1-ellt 80 85 90 95 1,200 per prices has been to speed the anticipated 2%, primarily

3.0 _ drop in prices as new supplies increase. Over

_95 2.658 26 the next few months increases in supplies that because of lowerMAY ~~~~~~~~~~aluminumi anid

O.8CT55 \ 'M96 are already in the pipeline will be matched by

95 slow to moderate growth in demand. While copper prices.

there is some evidence that demand may be 103.7 1990 = 0

greater than anticipated in the US, demand in 1995

2,1 40 Europe and Japan remains weak. Preliminary

JUN estimates suggest that inventories grew during 98.\96

the second quarter, in part due to greater thani Q945

PRICES PLUNGE anticipated supplies from countries of the for- 9

On June 6 the price of copper traded on mer Soviet Union. 1996

the London Metal Exchange (LME) dropped Global demand for copper was flat during 94 Q21996

15 percent in just two hours. In six trading the second quarter, and only a modest gain of QI

days, copper prices had fallen 25%. Analysts 1.5% is expected for the year. In the US

initially attributed the unprecedented fall to growth in the wire and cable business remains

a clash between Japanese powerhouse brisk, but trails lastyear's pace. However, hous-

Sumitomo and two large US-based hedge ing starts in the US were up nearly 6% in April.

funds, George Soros's Quantum fund and Demand for copper is expected to show slug-

Julian Roberson's Tiger fund. Then on June gish growth in Europe while growing inJapan

14 Sumitomo announced that the company's at 1.5%. Only in a few developing countries, h. *

principal copper trader, Yasuo Hamanaka, including Chinia, the Republic of Korea, and Thousands of metnc tons

was accused of losing over $1.8 billion in Mexico, is robust demand growth expected. j,579

unauthorized trades during a 10-year period. After a strike at the huge Chilean mine at 95

Sumitomo, a 400-year-old trading house, Chuquicamata that lasted just 10 days, pro-

entered the copper market in the late 17th duction is up 10.5% from a year ago, and 906

century. Today, the firm handles nearly 7% other Chilean mines are posting similar 96

of western trade in physical copper on numbers. Output from Escondida, which is

behalf of its clients. Sumitomo hedged posi- expected to surpass Chuquicamata as thetions in the physical markets on the finan- world's largest copper mine, grew 85.7%. JL530

95T OCT

cial markets; Hamanaka headed the trading Privatization or partial privatization is

operations. The Financirzl Times reports that planned for several state-owned copper min-

Hamanaka was known as "Mr. Five Percent" ing agencies. Chile's National Mining Thousands lfme.c ton

because he was believed to control 5% of Society, Sonami, proposed modifying Chile's 353 5

the global copper market. Sumitomo's posi- constitutioni to allow private capital partici- JT96

tion on the LME was reportedly even pation in the state-owned Codelco. Such a JAN

greater. revision would pave the way for privatization.

Sumitomo's losses on the LME come on In Zambia, the government has accepted a 2626

the heels of two other large trading losses in Rothschilds report to sell the state-owned 96

financial markets last year involving Barrings ZCCM. Iranian copper producer Nicico is 2048

and Daiwa. In addition, the Chilean copper likely to float 20% of its government-owned 151.0

producer Codelco suffered large losses on stock on the Tehran Stock Exchange. And in JUL95

the LME from rogue trading operations last Myanmar several companies have set up Source. Metal Bulletin

year. In all cases basic aspects of internal con- joint-ventures with government-owned min-

trol were not in place, including the use of ing agencies.

AUGUST 1996 19

METALS AND MINERALS

GOLD 40476 IRON ORE AND STEELfEB

L 600 96 IRON ORE 3325IRON ORE 1~~~~~~~~99!

450 ~~~~~~~~~~~32 50982

80 85 90 95 30028 60

(US5 dollars/trrjy ounlce) 28 09 1996UK~ 99 5% fine /980

386 23JUL'

38527 YEARLY (US dolrmt Fe) 2547JUN Bmrzon, cvrd contuct pnce 1994

383 06 96 to GermanySEP 23 5095 1988

PRICES RETREAT FROM $400/OZ LEVEL INTERNATIONAL MARKETS MIXED FOR STEEL AND

Gold prices turned lower following the WEAKENING FOR IRON ORE

high prices in January and now appear con- The industry's seasonal summer slow-

fined to the narrow range between $380/toz down has begun. Steel prices are expected to

and $390/toz. The sharp increase in crude stay flat through the summer and to increase

oil and grain prices during April and May did toward the end of the year, because of

not translate into higher gold prices despite extremely positive worldwide indicators suchthe historical relationships among these as low interest rates and high industrial pro-commodities. The KR-CRB index rose to an duction. As the economic recovery gets a

eight-year high, but the increase was not boost from countries with low interest rates,enough to keep gold prices from falling. the steel industry should benefit since steel is

The strong dollar may have been one fac- a derived-demand industry for which trendstor keeping gold prices from rising along in the global economy are critical. Demandwith other commodity prices, but the for iron ore and scrap is expected to remain

absence of inflation, despite higher prices strong in 1996 with the improvements in thefor some commodities, was probably more steel markets. Despite the decline in demand

important. Concern that central bank selling in Europe andJapan, global demand for iron

will drive back price increases may also be dis- ore remained virtually the same as year-ago

couraging speculative demand, which nor- levels in the first quarter.mally accompanies rising commodity prices. International steel markets are showing

In Japan the weak yen has dampened contrasting signs between regions. Although

demand for gold for both jewelry making both long and sheet markets are strong in the

and bullion. China and Hong Kong traders US, Asian markets have been suffering from

have also reported weak demand and some oversupply and low demand except forresale of gold bullion that was being held for Japan, where prices remain stable. In Europe

speculation. Other Asian countries have demand in general remains weak except for

bought moderate amounts, but not enough a slight seasonal upturn in construction.

to offset lower demand in China and Japan. Despite the strong scrap and iron ore mar-

Heavy producer selling has also been kets in the beginning of the quarter, prices

reported following the higher prices early in had started to weaken with slowing steel mar-

the year and the strong mine output over the kets by the end of the quarter.

past year. Many investors are also reportedly US steel prices are the highest in the world

holding gold bought during the price because of relatively strong economic growth-

increases of early 1996 and may be quick to in the US during the first half of 1996 and a

sell if prices show any increase. favorable supply-demand balance. The long-


FERTILIZERS

product market is firm because of the upturn FERTILIZERSin construction activity. Recovery in the con- PRICES MIXED Fertilizer pricesstruction industry has led to price increases of Some fertilizer prices weakened during were 2.3% higher$7.70 to $22 per ton for structural steel, wire the quarter, and analysts are now asking for the quarterrod, and merchant bar. Sheet prices also rose whether the highs are over for this cycle. because of high-during the quarter because of better than Urea and potassium chloride prices erTSP prices.expected demand from the automotive remained well below the highs reached dur- 1990 = 100

industry and a series of major unplanned ing the end of 1995, though TSP prices kept 1891996

stoppages, most notably at US Steel. rising. High grain prices have kept demand 116.2 Q2

The combination of high US prices and for fertilizer growing, but fertilizer supplies 1996

the strong dollar increases the prospects of have begun to catch up as production capac- Qi

US imports from international steel markets, ity responded to the high fertilizer prices ofespecially Europe. After increasing in the first the past two years. 995

half of the year, beam prices have already Area planted to grains is expected to rise Q4

started to weaken because of high imports. In 18 million hectares in 1996 over the previous 1995

the second half of the year increasing imports year (+2.6%), keeping fertilizer demand Q3

and domestic production should put down- strong. Wheat and coarse grains account forward pressure on prices. High imports also most of the increases, with rice increasingaffected US scrap prices, which fell in June much less. Grain stocks are expected toafter rising in May. The downturn in prices remain low despite higher production, andmay not continue for long, however, because fertilizer demand should remain strong inscrap markets are expecting a boost with new 1997. World demand for fertilizer hasmini-mill capacity expansions. remained strong, with imports from Asia and

In Europe, despite the slight improvement Latin America sharply higher. China hasin the long-product market, prices continue been an especially large importer.to weaken. Sheet prices are also expected to Argentina has been importing largefall because of persistent high stocks, weak amounts of fertilizer because of recentdemand, and fierce competition between EU increases in grain area planted. Fertilizermills. No recovery is expected in the near consumption has grown 25% a year over thefuture because of the traditionally slow sum- past four years, with demand rising frommer holiday season. Scrap export prices 900,000 tons in 1994 to 1.2 million tons inremained stable in June but are expected to 1995 to make Argentina the fastest growingweaken as demand from Asia declines. fertilizer market in the world. Since domes-

TheJapanese economy has been recover- tic production is small, the increased con-ing slowly and so has the steel industry. The sumption has come mainly from importedautomotive and appliance markets have fertilizers.remained weak, while construction activities Area planted to grains increased about 2have increased. In addition to slow domestic million hectares in the EU in the currentrecovery, weak international markets and crop year, and further increases are expect-fierce competition from producers in ed next year. The European CommissionEurope and countries of the former Soviet has proposed a cut in the set-aside from 10%Union have underminedJapanese steelmak- to 5% for the 1997 crop year. If approved,ers. Even the weakening of the yen in early this change would increase cropland plant-1996 and production cutbacks have not ed by roughly 1.7 million hectares and resultimproved steel prices. Similarly, scrap prices in higher fertilizer use. At EU applicationfell 20% below January 1996 levels in June, rates of 180 kg/hectare, this would meanbut the decline has been softened by a drop substantially higher fertilizer demand inin imports and an increase in scrap exports. 1997.

AUGUST 1996 21

FERTILIZERS

POTASSIUM CHLORIDE TSP 174.63JUN96

19,75 8NOV

11900 95J9 5\ 140 /

80 85 90 9510 v

\ ~ ~ ~~~~~~- -< 162 S0

(US dollrslmt) 9JAMunote of potosh, st7ndord 1700grode, spoE, fob 1oncouve JUN

96

P- _=° \oJs o11650 OCT (US dollarstmt)JAN 17595Tniple superphosphote,

60 96 JUL spot, bulk, fob US Guol80 85 90 95 95

PRODUCERS CUT SUPPLIES TO HOLD PRICES PRICES CONTINUE TO RISE

STEADY TSP prices continued upward during the

Potassium chloride prices remained steady quarter, and by June nominal prices were

at $117/ton during the quarter, nearly the 56% higher than in 1993 and 32% higher

same as during the first quarter. However, the than in 1994. TSP prices (bulk, spot, f.o.b.Potash Corporation of Saskatchewan closed the US Gulf) averaged $173.9/ton in the sec-

several mines in order to keep prices up. The ond quarter, up from $168.4/ton in the first

company has cut 780,000 short tons of pro- quarter. DA-P prices have been as high as

duction for the first half of 1996 according to $215/ton f.o.b. from the US, averaging

industry sources. The cuts are much larger $204.5/ton for the quarter and $210.6/ton

than is typical of summer vacation schedules for June-63% higher than in June 1993.

and indicate an oversupply in the industry. Inventories are low, and the South American

Negotiations for second-half deliveries of market is approaching peak season. Australia

potassium chloride have begun, with tenders is also entering the market and is expected to

held in Brazil, Italy, Pakistan, Spain, and increase grain area planted in response to

some other countries. Suppliers are not high world prices.

pushing for price increases following slow Tight supplies and strong import demand

sales during the first half of the year. Prices may keep prices rising a while longer, but

are expected to remain steady or even to slip some analysts are questioning whether prices

from current levels. can continue to rise since strong price

Freight rates for fertilizer shipments con- increases lead to production increases. On

tinue to drop, allowing buyers to achieve July 1 the US phosphate producer IMC-

lower c.i.f prices. Rates are now at four-year Agrico announced that it was restoring pro-

lows. The decline has been especially sharp duction at its New Wales DAP plant to full

since January, with rates for muriate of capacity following the recent strength of

potash falling by as much as 20-30%. North American and international demand.

Renewed interest has been shown in This decision reflects the quick response of

developing a 1 million tons per year potash some producers to prices and may limit the

project in northeast Thailand, according to potential for further price increases.

industry sources. The project would include China is reported to have imported 5.4

major funding from Japan, Indonesia, million tons of DAP in 1995, well above the

Malaysia, and Thailand, as well as additional 3.9 million tons in 1994. This large increase

funding from other ASEAN countries. The reflects the government's commitment to

project is still being studied, preparatory to balancing nutrient use through adherence

final approval. to recommended application rates.


ENERGY

UREA COAL235 50 YEARLY (US doll or/mrt)NOV 56 50 US thermal, fob Hampton

1981 Rods, Norfolk

48 50204 60 1984JUN96

(US doltcrslmt) I 8ajed, spot, fo b.o, W Lurope

250 43.10191 ii S 70 1980

kk ~~~~~~MAY18500 175 96 3690JUL 'W 36.17 3648 1996

95 ~~~~ ~ ~~~~~~~~~~~~~~~1987 1994

10080 85 90 95

PRICES EASE SUPPLIES TIGHTENING

Urea prices slumped following the large Coal prices weakened slightly during the

purchases for the northern hemisphere fall second quarter, but a number of factors are

and winter wheat plantings and spring grain causing markets to tighten. Demand for

crops. Prices started to rebound toward the steam coal remains strong, especially in Asia

close of the quarter to end with ajune aver- where electricity demand continues to grow

age of $204.6/ton (bagged spot f.o.b. West rapidly. In addition, supplies are tightening

Europe.) The average of $198.5/ton for the in several major producing countries. A 10-

quarter was well below the $220/ton average day strike in Australia at the Dalrymple Bay

for the first quarter. A major source of terminal affected shipments and stocks in

demand was the large increase in US maize June. South American coal producers are

area-an estimated 7.4 million hectares sold out, partly because new production

(11.4%) for the current crop year according from Colombia has been slow to come on-

to USDA estimates. stream. South African producers are also

Indian demand for urea has been weaker sold out owing to strong demand and bottle-

than expected during the past quarter necks at terminals.

because of large carryover stocks from 1995. For 1997 prices could edge upward on con-

The strength of the US dollar has also tinuing strong demand worldwide and a rela-

reduced import demand for other fertilizers. tively tight supply situation. Robust demand in

The government appears ready to limit the Asia is likely to draw supplies from South

fertilizer subsidy by cutting payments to urea Africa, but terminal constraints will affect

producers under its retention pricing shipments next year, causing tightness in both

scheme, which reimburses producers for the European and Asian markets. Expanded ter-

difference between controlled selling prices minal facilities in South Africa are not expect-

and manufacturing costs. However, some fer- ed to be completed until 1998. Higher

tilizer plants are suspected of understating production from South America will help alle-

capacity in an effort to collect extra subsidies viate some of the upward price pressures.

for operating at more than rated capacity. In the US, coal markets are undergoing

At a reported 7 million tons in 1995, fundamental changes due to deregulation of

China's imports of urea were more than dou- the electric utility industry. The shift to freer

ble 1994's 3.1 million tons. The sharply high- electricity markets means that utilities are

er imports of urea, DAP, and potash reflect looking for low-cost fuel and minimizing

the Chinese government's strong efforts to stockpiles. Some utilities are buying coal

boost grain production following large from more distant markets, and some are

imports of coarse grains in 1994. purchasing lower-cost, higher-ash coal.

AUGUST 1996 23

ENERGY

NATURAL GAS weather is normal, price spikes could be

4FEB0 avoided. Again, the weather will be a major30 96 factor. There are also concerns, however,

about constraints on gas supplies reaching.nrahehspatwntrtancsittd2.25 /\eastern markets, as evidenced by the limits

80 - - - I 5reached this past winter that necessitated a80 85 90 95

(USdd1ars4/mmbtu) 2.49 heavy draw on storage. There is ample sur-Spot He"yHubLPo°uisonet r X 96 plus productive capacity in the western US

2.23 and Canada, but no spare pipeline capacityAPR to bring those extra supplies east.96

The pressures on supply and higherJuL prices have induced an increase in upstream95

activity, particularly in the Gulf of Mexico,PRICES SHOULD REMAIN FIRM THIS YEAR BUT FALL where a shortage of rigs is looming. In addi-

IN 1997 tion, there has been some progress in easingNatural gas prices were generally lower in pipeline constraints out of Canada and from

the second quarter following the price spikes the western San Juan Basin and Rockyduring the winter months induced by cold Mountains.weather and supply shortages. In June prices For 1997 prices could start the yearstarted strengthening again, to around $2.50 strong, depending on weather and invento-per million btu (mmbtu), mainly due to ries, but prices for the year should averagestrong demand for reinjection into depleted well below this year's expected level. With astorage facilities. less severe winter, withdrawals from storage

At the end of March gas working invento- would be lower. Gas production is expectedries stood at 742 billion cubic feet (bcf), to be higher as a result of the upturn in gassome 578 bcf below inventories last March. developmcnt activity, particularly in the GulfBy the end ofJune inventories were still near- of Mexico. In addition, more gas is expectedly 500 bcf below the previous year's level. to flow east as efforts progress to relieve bot-High rates of reinjection are required to tlenecks. While there remain significant risksreach 1995 end-of-October levels of nearly of both higher and lower prices, the market3,000 bcf. With favorable weather over the balance should be much improved next year.summer and early fall the extreme storage European border gas prices recordeddeficit should be reduced, but it is unlikely sharp increases in the second quarter owingthat storage will reach last year's levels before to the unusual strength in prices for gasoilNovember. and heavy fuel oil. The prices of these prod-

Demand has been curtailed somewhat by ucts, which are the main variables in cross-higherpricesandsignificantfuelswitchingby border natural gas contracts, have causedutilities to residual fuel oil. Nevertheless, imported gas in Europe to reach some of theprices should remain firm during the sum- highest levels of the past decade. The pro-mer because of strong demand for power jected decline in oil prices over the next yeargeneration to satisfy air conditioning require- should result in lower gas prices in Europe.ments and for reinjection into storage. Much In the UK spot market prices were volatilewill depend on the weather. Extremely hot following extreme fluctuations in weathersummer weather would divert significant vol- from a very cold May to an unusually hotumes of gas from storage, and injections June, and back to cool weather again. Otherwould fall well short of hoped-for targets. factors contributed to the volatility such as

If prewinter inventories return to within stockbuilding requirements and some reluc-

200 bcf of last year's levels and if winter tance by companies to sell at low prices.


ENERGY

PETROLEUM 40 enhance profitability. Thisjust-in-time inven-

(US do/orsbbl) tory behavior is now claimed to be the new Petroleum pricesSpot, amge ofBrent. 25 rose 6% becauseDubai,o WstTexa norm in the industry,

loerdt 1 On the other side of the debate are ana- o r and80 85 90 95 lysts who claim that recent trends in invento- itories and

ries have had less to do with company strong demand.decisions about inventory levels and more to 1990 =100 84.8

/996do with market forces that have caused a run- Q2

JUN down in stocks. They consider it curious that

aggregate stocks of crude and products start- 1996

16 _8 16 12 ed to fall in the US last September, but didJUL OCT not fall correspondingly in other major95 95

regions. They further point out that if it were 71 .9/995 7.9

a new strategy, it would be unusual for "all" Q 1995

Low INVENTORIES KEEP PRICES FIRM companies to start behaving this way last fall. Q4

Oil prices peaked in early April at $22.70 There is also an inconsistency with respect to

a barrel (bbl), and then generally declined the presumed management of crude and

by about two dollars throughout the remain- product stocks. While lower product stocks

der of the quarter. Prices remained more might result in higher product prices, the

than $1/bbl above last year's levels, however. price rises resulting from lower crude oil

This year's strong market has been led by the stocks would reduce refining margins. These

US market, which has been running on low analysts argue that if the intent were to

stocks and relatively buoyant demand. The enhance profitability, it would have been

key benchmark US crude, West Texas more prudent to keep low product stocks

Intermediate (WTI), peaked at $25/bbl in and high crude oil stocks. Having high stocks

earlyApril, while the benchmark Middle East last winter-all else equal-could have

crude, Dubai, rose above $19 on only one proved very profitable.

day. Differentials between these two crudes, On the market forces side, the US market

which had averaged $2.25/bbl in 1995, bal- lost a significant volume of Mexican crude

looned to nearly $5.50/bbl for all of April imports in the fall of 1995 because of hurri-

and averaged $3.70/bbl for the first half of canes in the Gulf of Mexico. With OPEC's

the year. Thus the apparent strength in oil quota policy keeping production essentiallyprices has not benefited all oil exporters flat for most of the year, stocks had to be

equally. drawn. The industry then entered a long,

A main component of the price strength cold winter in which stocks had to be drawn

has been the low level of inventories for even further. An expected large volume of

crude oil and petroleum products, mainly in new non-OPEC oil production in the first

the US. Analysts disagree on whether the low quarter did not come on-stream, resulting in

level of stocks reflects a conscious decision by additional reductions in inventories. As

the US petroleum industry to operate with soon as the tight heating oil season ended,

lower inventories or whether it is a result of the gasoline season began with low stocks,

market forces. US stocks began falling below exacerbated by requirements for the indus-

typical historical averages at the end of last try to hold oxygenated and reformulated

summer, and they have continued at low lev- gasoline in addition to conventional grades.

els since then. Petroleum analysts and many Not all petroleum product exporters can

in the petroleum industry claim that the supply the new material to the US, and thus

industry has deliberately run down its stocks a tight gasoline market and strong prices

in order to free up working capital and continued.

AUGUST 1 996 25

ENERGY

The question, then, is whether low stocks for the second half of the year is 25.033

will continue indefinitely under the newjust- mb/d of crude oil (up from 24.52 mb/d),

in-time industry behavior, orwhether market about 35% of global petroleum liquidsforces will determine stock levels over the supply.coming years. Our market analysis suggests OPEC output was marginally higher inthat market forces will be the main determi- the second quarter, with declines in the fournant of stock levels over the coming months major Gulf countries more than offset by

and that stocks will be rising and prices increases in other countries, particularlyfalling over the coming year. Although it is Venezuela and Nigeria (table 2). All OPEC

likely that some companies may be running members continue to produce above theirlower inventories in an effort to enhance quotas, with Venezuela producing nearly 0.6profitability and the stocks data appear to mb/d above its agreed ceiling in the second

show a new norm for the US industry, it is too quarter and Nigeria producing 0.26 mb/d

soon to say conclusively what has caused the above its quota. Even Kuwait and Saudi

lower stocks or to what extent they reflect Arabia produced above quota when theirnew inventory practices. equal shares of Neutral Zone production are

OPEC met in early June and agreed to included.

raise Iraq's quota by 0.8 million barrels a day Non-OPEC production edged higher in(mb/d) for the second half of the year, to the second quarter, with the largest increase

accommodate incremental exports from the coming from Australia's Carnarvon Basin.UN sanctioned humanitarian sale of $2 bil- North Sea output was lower because of main-lion in oil exports over a six-month period. tenance, an oil worker's strike and other dif-

Quotas for all other countries remained ficulties (table* 3). African productionunchanged at the levels set in September recorded a sizable increase, mainly from new

1993. OPEC membership shrank to eleven fields in Angola and Egypt. Other notablecountries when Gabon left because the increases occurred in Latin America, mainlygroup would not amend its formula of equal in Mexico but also in Brazil and Colombia.

contributions to the organization. Ecuador World oil demand continued its moder-had already left at the beginning of 1993. ate growth, rising an estimated 2% in the

With Gabon's quota of 0.287 mb/d gone second quarter (table 4). OECD oil demand

and Iraq's higher ceiling, OPEC's new quota rose less than 2% following growth of near-

ly 3% in the cold first quarter. In the US

TABLE 2. OPEC CRUDE OIL PRODUCTIONAND QUOTASMillions of borrels per day TABLE 3. NON-OPEC OIL SUPPLY

/993 1994 IQ96 2Q96 Quotas Mi/lions of barrels per day0.eria O~75 0.76 0.78 0 80 0.750 Change,

Algena 0.507/.8 08 .5 993 /994 1Q96 2Q96 IQ96 to 2Q96Indonesia 1.32 1.34 1.38 1.40 1 330Iran 3.61 3.65 3,69 3.68 3.600 Unied States 8.64 8.61 8.52 8.48 -004Iraq 0.53 0.55 0.55 0.55 1 200 Canada 2.28 2.39 2.44 235 -0.09KuLwait 1.84 1.84 1.84 1.79 2 000' United Kingdom 271 2.79 2.83 2 70 -0.13Libya 1.38 141 1.38 1.39 1 390 Norway 269 2.91 3.22 3.26 004Neutral Zone 0.39 0.43 0.46 0.47 OtherOECD 1.32 1.28 1 27 1 41 0.14Nigena 1.90 1.93 2.09 2.13 1.865 Latin Amenca 5.94 6.09 6.50 6 56 0.06Qatar 0.41 0 45 0.47 0.48 0.378 Africa 2.39 2.59 2.60 2.68 0.08Saudi Arabia 7,90 7.94 7.95 7.88 8.000' Middle East 1.79 1.90 1.89 1.91 0.02UAE 2.22 2 19 2.19 2.18 2.161 China 284 2.99 3.09 3 12 003Venezuela 2.44 2 58 2.89 2.94 2.359 Other Asia 1.94 2.04 2 08 2 06 -0.02Total Crude 24.67 2506 25.67 25.68 25.033 FSU 7 22 7.15 7.11 7.09 -0.02NGLsb 2.38 2.42 2.52 2.56 East Europe 0.28 0.27 0.28 0.28 0.00Total OPEC 27.05 27.48 28 18 28.23 Processing Gain I 43 1 48 1.51 1.51 000

a Quota includes share of Neutral Zone. Total non-OPEC 41.47 42 SI 43.33 43.40 0 07b. Natural gas liquids (NGL). Note: Includes NGLs, nonconvenbonal, and other supply sourcesSource Intemational Energy Agency and OPECNA. Source Intematonal Energy Agency


ENERGY

April gasoline demand figures were revised than in the fourth quarter of last year. The

upwards significantly, indicating strong North Sea is projected to add as much as 0.8

growth of nearly 3%. While preliminary mb/d more than last year, with the UK

data for May and June show much weaker expected to provide two-thirds of thedemand, final figures will show just how increase, mainly from new field production.strong US gasoline consumption actually is. Higher production is also expected from

In the non-OECD countries outside the for- Australia and Canada, for a combined total

mer Soviet Union (FSU) and East Europe, of 0.37 mb/d.

demand rose by an estimated 4.5%, with the In the non-OECD countries production is

largest growth continuing to be in Asia. projected to be about 1.4 mb/d higher than

Partly offsetting these gains were further last year. The largest increase is expected in

moderate declines in apparent demand in Mexico, partly reflecting the effects of hurri-

the FSU. canes on its production during the fourthThe outlook for prices for the remainder quarter of 1995. Notable increases are also

of the year is less robust because of antici- expected from a number of other coun-pated increases in non-OPEC supply and tries-Angola, Brazil, China, Colombia,

higher output from OPEC, mainly Iraq. At Congo, and Kazakhtan. In addition, Iraqi oilthe beginning of the third quarter invento- is expected to be on the market by the end of

ries in the OECD were 5% below last year's the third quarter, providing an additional 0.8

levels, or more than 100 million barrels. They mb/d.were also well below the lows of the past seven Based on the market projections shown inyears. Low inventories should keep prices table 5, oil supplies could exceed demand by

strong in the third quarter. 1.4 mb/d, or 110 million barrels, assuming

However, inventories are expected to that the rest of OPEC does not increase pro-

build in the third and fourth quarters as oil duction and that weather is near normal.supply increases significantly. Non-OPEC Typically, stocks are drawn in the fourth

oil supplies are expected to increase 0.6 quarter. This excess output must find its waymb/d in the third quarter, shared equally into stocks, which is expected to cause oilbetween the OECD and non-OECD regions, prices to decline. Weaker prices could quick-

and a further 1.5 mb/d in the fourth quar- ly send futures prices into contango, thereby

ter, which is more than 2.6 mb/d higher providing an incentive to build stocks.

TABLE 4. OIL CONSUMPTION

Millions of blarrels per day Percentoge change

FSU and Developing FSU and DevelopingOECD Eastem Europe countnes Total OECD Eastem Europe countnes Total

1990 38.1 10.1 183 66.4 0.3 -5.0 4.3 0.51991 38.2 96 19 1 66.9 0.3 -4.8 4.5 0.71992 38.9 8.4 203 67.5 1.8 -12.5 6.3 1.01993 39.1 70 21.7 67.7 05 -16.7 6.4 0.21994 40.0 6 1 227 68.7 2.3 -12 1 4.2 1.31995 403 6.2 235 700 1.1 -08 44 2.01Q94 40.7 67 22.4 698 27 -13.0 5.3 1 92Q94 38.8 5.7 22.1 66.6 3 1 -18.6 3.9 1.13Q94 39.7 5 9 22.3 67.9 2 8 -7.8 4.7 2.44Q94 40.9 63 23.3 70.5 09 -100 5.0 1.31 Q95 41.0 6 5 23.5 71.0 0.7 -3 0 5.1 1.7

2Q95 39.2 5 9 23.2 68.3 1.0 3.5 4.8 2.63Q95 398 5.8 23.1 68.7 02 -1.7 3.6 1.24Q95 41.4 6.3 24.2 71 9 1.2 0.0 4.0 2.0I Q96 42. 1 6.3 24.4 72.8 2.7 -3. 1 3.8 2 52Q96 39 8 5.7 24.2 69.7 1.5 -3.4 4.5 2.0

Source Intemational Energy Agency and World Bank

AUGUST 1996 27

ENERGY

International Energy Agency (IEA) supply In 1997 further increases in non-OPEC

projections could be too optimistic, given the supplies are expected to more than satisfy all

possibility of delays in starting new fields and projected increases in demand. It is assumed

other industry disruptions. In that case, the that Iraqi humanitarian sales of 0.8 mb/d will

impact would be less. Colder than normal continue indefinitely, which suggests excess

weather could also provide for higher demand supply, rising stocks, and lower prices next

that would absorb some of the excess supplies. year.

TABLE 5. WORLD PETROLEUM DEMAND AND SUPPLYM4illons of barrels per day

1993 1994 1 Q95 2Q95 3Q95 4Q95 1995 1 Q96 2Q96 3Q96 4Q96 1996

DemandOECD 39.1 40.0 41.0 39.2 39.8 41 4 40.3 421 39.8 407 41 9 41.1FSU 5.7 4.8 5,1 4.5 4.5 4 9 4.8 4.8 4.3 4.3 4.9 4.6Other 22 9 23.9 24.9 24.6 24 4 25.6 24.9 25 9 25 6 25.5 26.8 26.0Total 67 7 68.7 71.0 68 3 68.7 71.9 70.0 728 69 7 70.5 73.6 71.7

SupplyOECD 16.8 17.6 18 1 177 17.8 18.4 /8.0 183 18.2 18.5 19.6 186FSU 7.9 7.2 7.1 7.2 7.1 7 2 7 2 7.N 7.1 7.2 7 3 7.2Other' 16.0 16.7 17.3 17.2 177 173 17.3 179 181 18.3 18.6 18.0OPECb 26.7 27.0 27 2 27.3 27 6 27 8 27 5 28.2 28.2 28.4 29.3 28.2Total 67.4 68 5 69 7 69.4 70 2 70 7 70.0 71.5 71.6 72 4 74 8 72.4

Stock change and miscellaneousOECD 0.2 0.2 -/ 2 07 0.5 -1.3 -0.3 -/ 2 1.2FloatingAransit 0.1 -0.1 -0 3 0.1 0.5 0.3 0 1 -0 2 0.1Other/miscellaneous -0.6 -0 3 0.2 0.3 0.4 -0 3 0 2 0.1 0.6Total -0.3 -0.2 -1.3 1.2 1 4 -/2 0.0 -1.3 1.9

Note Includes natural gas liquids (NGLs), nonconventional, and other supply sources.a Includes processing gains (I 5 mb/d in 1995).b Includes NGLs (2.4 mb/d in 1995)Source Intemational Energy Agency and World Bank


COMMODITY PRICE OUTLOOK

"M ~ FOODS

700 doll70 pece, 550 70 percentdanbut,o35n ,snbito

400 PIn c4o 4 6 250 ic i CO2361970 /980 /990 A 2000 1970 /980 1990 00

600 350 S B 94 9 X 9

Price n curren Price in currentdollar; per me inc ton cents pr kilogre m

1970 198170198 p1990~m / 300

600 Price irftWw current l l 1 | Price i|current| l 262b

443 439er 4 dstnburo 463 2 5i o 4t 1-peronol.

475 4 , 5 233 236, 236

200 -/

300 C '1993 94 95 96 97 98 1993 94 95 96 97 98

650 * -- * I70 perent MO.0 70 percen

550 p probabity I6.0 pA.,l ,dyntiio450~- ;- 30350 P c ic ns n..-. - 0 Prce n constant .- ' ..

/990 do//ors I/1990 dollars/970 / 980 /990 2000 /970 /980 /990 2000

|Price in current Prc in current|201 l

dollars )er metri ton ' dollars )er kilogi am525 5 1 75 ___

41150 1 5 2 3 /3.70

3001 __________ __I

1993 94 95 96 97 98 1993 94 95 96 97 98

AUGS BEVERAGES

/10 /6.00 . 70 perce tPrice/a coestant I 70 percent 4 00pob p8.0 1990 dollars d I rabo/-

350 ~ ~ ~ ~ ~~~~dtnai2.00 Prc sCoso350 ""A /~~~~~~~~~~~~~~~~~~~~990 dollrs-

1970 / 980 1990 - 2000 1970 /980 /990 1 2000

350 2 0~~~~~~~~~~~~~1

1993e 94 95ren 96r7i8c99 94 9cu96 97n9

AUUS 199.2


with recovery in Brazil's supply

11 eoo A0 70 percent 600 7perc6 25 / s tprobaNbity 4 50

4 50 dstnbuvon 3 00~~~~~~~~~~~~~~~~~~~~Ino

2 75 l ,1990 dolars I 1990 dallort

1970 1980 1990 A 000 1970 i980 1990 2000

.0c ~~~~~~2 50- Price in current Price in currentdollars )er kilog am dollars per kilogr am

7.OG( _ .00

33 333 70 percent 18 6 1.83i85

33 5 180

0000' ~ ~ ~ ~ 27-7 2.15 '.7130C 1 .2- 56 1.6(=t4 _ T

993 94 95 96 97 98 1993 94 95 96 97 98

FATS AND OILS ; = Price increases PALM OIL Prices declined due

due to low supplies to expanding supplies

1970 1980 1990 2000 1970 1980 1990 00

2,000 N M7500Prce indcurren t nt Pncein|current |

dollars er metr c ton prob,biity - dollars per metri ton900 dsofbiitiit 650 __-

7'5 3-0 700 . pnant

600 - 670608 5 5 0 i0tb,608 5~~ ~ ~~~~~~~~2851

460400 4501 1 1 1- ! 450l/l 1 ] < X s~~~~~~~~44

200 _ 378 _ _____

993 94 95 96 97 98 1993 94 95 96 97 98

GRAINSkeep prices above long-run trend

ISO rCe In ca,nvto 70pecn 275! 70--- Oeie

.0)> \ -1990 dollars PX.Coba rit 225- prbility1,102 damStnO Prc 7 i,owo nobtn

xo 7m ~ ~ - fi 125 0rs - ,

1970 1980 1990 000 1970 1980 1990 00

P0 Price in current 200 Price in currentdollars )er metr| -ton 180 dollars oermetri: ton

700° - 160 - 7799 69 6 625 96 97o6 9 1625

480 - 575 ~~~~~~~~~~~~~ ~570 140 __ S 3120 -12

0072!f108 __

300 CC193 4 95 96 97 98 1993 94 95 96 97 98



RICE Prices could move higher WHEAT Prices to remain volatile

450 t I Pnc-intconsron, 70 percenm U250 _"i990 iOtn

1970 1980 1990 /\ 20

94 95 96 97 98 94 95 96 97 98

COTTON Increased stocks further RUBBER Prices flat to falling AG RIC UL-depress prices TURAL

___ _ __RAW

7,5 I WIN __MATER IALS190 980 990 90 980 1990

240Price in current

CenTsO pnrae stock kiloger RUBE Prices ina tcurrenGt IC L

210cents pr kilo;cr

180~~~~~~~~~~~~~~~~~~~5

197 198 1790 dsbt! 8 1970 198b190

I 76 117

'2 --18 5 119- 120 ___813

1993 94 95 96 97 98 1993 94 95 96 97 98

TIMBER Log prices continue ALUMINUM Prices continue declining M ETALS(MERANTI LOGS) their recovery AND

_,,- l--' --- , _ , MMINERALS

1970 1980 1990 1970 1980 1990 j

*EFa3IIW4(4 ** *uuw_

94 95 96 97 98 94 95 96 97 98

AUGUST 1996 31


COPPER Prices fall in June GOLD Prices retreat to a narrow range,

70 wece~t 75 70k~e,4000 \J\ t990 dotttrs - p,obobry '5 0! 1190 5... - p irnobab

i 00°O- -- | 1350' L - ,

1970 1900 1990 _ 19 1980 1990 A 2000

3.000 6002.36 Price in :urrent Price in current

dollars er metri: tan dollars per troy cunce

2,600

2.200 29307 9 25 4 9897- ,072 420

1,800 7,1 ,8 0 8441I 'bbty 36

1,6001 300 -1993 94 95 96 97 98 1993 94 95 96 97 98

FERTILIZERS IRON ORE Prices remain weak POTASSIUM Prices unchangeddue to slow steel markets CHLORIDE

50 7~~~~~~~~~~0 perwtr 300 Z0eco -* / x~~~~~~~....i:~~~~~~~~~IxDbpdrabob6tyu 7

| 0 1 1 70penent 200 1990 dollorn t5

30 100 .

1970 1980 1990 2 0o00 1970 1980 I990 2000

40 Price in current lollars 160 Price in currentper me ric ton. Iry weigh' dollars per metri tan

35 , 140 19

6°°1 A PHsemconst-tmr'- l ; ~~70 trn l Wtta;cntn = 0pe,7 n

3020 1980 199 / 2000 1200 18 192

2.4 5.47 2.7 90029.50 107 '18119 12

25- 2l5--10 0

20 801993 94 95 96 97 98 1993 94 95 96 97 98

TSP Prices remain strong UREA Prices weaken

60 ce, .- 70 pe,en62, -- 70 percen

- 199 dollas I 45 - 199 dollr p bIn

distn n d: . I., . ;

3003

1970 I1980 1990 A 200 1970 1980 19,90 2000

Price in current ~~~~~~~~~~Price in currentdollairs )er metri ton&mbt dollars per metri to

125 - 'do 32 148~ ~~~~- '9U

150 ~ ~ ~ ~ ~ ~ ~~~8

112~ ~ ~ ~ ~ ~ ~ ~~~~~~~01993 94 95 96 97 98 1993 94 95 96 97 98



COAL Long-term prices flat NATURAL GAS Prices to fallas ENERGY(US) market balance improves

1970 1980 79905

NATURAL GAS Increasing competition PETROLEUM Weaker prices expected with(EUROPE) -over the longer term large increases i.n supply

___ 9970 1980 1990 _

HUE _ -- _

*** .** *..~... *

AUGUST 1 996 33


TABLE Al. COMMODITY PRICES AND PRICE PROJECTIONS IN CONSTANT 1990 DOLLARS

Short-term Long-termActual projections projections

Commodity Unit 1970 1980 1985 /990 /992 1993 1994 /995 1996 1997 1998 2000 2005_

EnergyPetroleum $/bbl 4.82 5/ 23 39.62 22.88 17.84 15 84 14.42 14.92 15.40 13.65 12,96 13 /5 13.17Coal $/mt ., 59 89 67.93 41.80 38.07 35 74 33 10 34.01 32.91 33.09 33.21 33.27 33.26Natural gas, US $/mmbtu 0 68 2.15 3.57 1 70 1.66 1.99 1.74 1.49 2.15 1.70 1.62 I 70 1 87Natural gas, Europe $/mmbtu . 4.72 5.39 2 55 2.40 2.51 2.21 2.37 2 32 2.23 2,19 2.09 2,01

FoodCoffee (Oth Milds) f/kg 457 482 471 197 1 32 147 300 289 2/8 1 88 174 170 /66CofTee (Robusta) ~ /g 364 45/ 386 /18 8 8 109 238 241 161 144 138 / 35 134Cocoa Vlkg 269 362 329 127 103 105 127 124 /25 127 128 132 139Tea &kg 437 3/10 289 203 /88 /75 166 143 146 /49 /50 1 55 / 52

Sugar $/Mt 323 878 130 277 187 208 242 255 2/9 191 196 207 238Beef ~ /g 520 384 3/14 256 230 246 2/2 166 /54 174 191 200 211Shnmp ~ /kg 1,108 1,421 1.529 1,079 1/027 1,071 1,187 1,165 LOSS5 1,092 1,110 1,100 /,051

Bananas $/Mt 659 527 55/ 541 444 417 399 386 401 38/ 375 376 378Oranges $/Mt 670 543 581 531 459 407 373 46/ 405 403 399 406 406

Rice $/mt 504 57/ 287 27/ 251 221 243 279 304 285 267 255 24/Wheat $/Mt 2/9 240 /98 /36 142 /32 /36 154 181 153 /34 /24 IIIMaize $/Mt 233 174 164 109 98 96 98 /07 152 124 lOS 97 87Grain sorghum $/Mt 207 179 /50 104 96 93 94 103 /47 120 102 91 85

Fats and oilsPalmaoil $IMt 1,037 8/I 730 290 369 355 480 545 430 38/ 360 325 300Coconut oil $/mt /,584 936 860 337 542 424 55/ 582 637 604 567 573 489Groundnut oil $/Mt 1,510 1,194 1,319 964 572 695 928 861 768 711 632 596 450Soybean oil $/Mt 1,142 829 834 447 402 452 559 543 485 488 462 433 400

Soybeans $/Mt 466 412 327 247 221 240 229 225 263 248 235 232 230Copra $IMt 897 629 563 231 357 278 379 381 414 392 369 325 344

Groundnut meal $/Mt 407 334 208 /85 146 158 153 147 152 148 140 /67 187Soybean meal $/mt 4/I 364 229 209 192 196 175 171 215 199 /86 193 /90

Nonfood agricultureCotton v/kg 252 284 /92 /82 120 120 160 /85 151 146 /51 /52 ISORubb6r ~ /kg 162 198 III 86 81 78 102 137 /22 /19 1/4 I/O 117Tobacco $/Mt 4,290 3,162 3,807 3,392 3,226 2,535 2,395 2,292 2,439 2,399 2,369 2,302 2,148

TimberLogs (Meranti) $/cum 148 272 /77 177 196 367 279 222 215 219 227 232 249Logs (Sapelli) $/cumn 171 350 253 344 311 292 300 295 228 240 255 286 312Sawnwood $/cum 699 551 448 533 569 713 745 643 629 633 640 658 693

Metals and mineralsCopper $/mt 5,634 3,032 2,066 2,662 2,139 1,799 2,094 2,549 1,898 1,641 1,678 1,676 1,742Tin ~/kg 1,465 2,33/1 1,682 609 572 528 496 540 530 519 509 511 547Nickel $/Mt 11,348 9,058 7,142 8,864 6,566 4,979 5,753 7,145 6,498 6,452 6,399 6,267 6,333

Aduminum $/mt 2,1 53 2,466 1,517 1,639 1, 176 1,071 1,340 1,568 1,300 1,365 1,417 1,547 1.386Lead $/Mt 1,212 1,259 570 8/I 508 382 497 548 662 645 583 522 474Zinc $/Mt 1,176 1,057 1,141 1,513 1,163 905 905 895 861 885 883 870 870

Iron ore . ~/MTU 39.23 39.03 38,72 30.80 29 65 26 47 23.11 23.40 24.11/ 23.99 23.89 23.60 22.83

Gold $Aoz 143 845 463 384 322 338 348 334 333 339 340 337 312Silver g/toz 706 2,867 895 482 369 404 480 451 456 459 462 445 409

FertilizersPhosphate rock $IMt 44 65 49 41 39 31 30 30 33 33 32 32 30Urea $/Mt 193 309 199 157 /32 /00 134 184 /77 /57 /46 /35 130TSP $/mnt 169 25/ /77 132 113 /05 /20 /30 /43 /32 126 1/8 /09DAP $/Mt 215 309 246 171 136 121 157 188 /86 174 170 153 /45Potassium chloride' $/Mt 126 161 122 98 /05 /0/ 96 102 99 98 97 98 94

Not avai/able.Note. Computed from unrounded data and deflated by MUV (I1990= / 00) Forecast as of july 26, 1996.a. A~so known as muijate of potash.Source. World Bank, Istemational Economics Department, Commodity Policy and Analysis Unit.



TABLE A2. COMMODITY PRICES AND PRICE PROJECTIONS IN CURRENT DOLLARS

Short-term Long-termActual projections projections

Commodity Unit 1970 1980 1985 1990 1992 1993 1994 1995 1996 1997 1998 2000 2005

EnergyPetroleum $/bbI 1.21 36.87 27 I8 22.88 19.02 16.84 15,89 17.18 18 25 16.5O 16 00 17.00 19.00Coal $/Mt .. 43.10 46,60 41.80 40.60 38.00 36 48 39.17 39 00 40.00 41.~00 43 00 48.00Natural gas, US $/mmbtu 0.17 1.55 2.45 1.70 1.77 2.12 1.92 1 72 2.55 2 05 2.00 2.20 2 70Natural gas, Europe $/mmbtu .. 3.40 3.70 2.55 2.56 2.67 2.44 2.73 2 75 2.70 2.70 2.70 2.90

FoodCoffee (Oth M/lds) 4/kg 115 347 323 197 141 156 331 333 258 227 215 220 240Coffee (Robusta) i/kg 9/1 324 265 118 94 116 262 277 191 174 170 175 193Cocoa 4 /kg 6 8 260 225 127 110 112 140 143 148 154 / 58 /70 200Tea 4 /kg I/O 223 198 203 200 186 183 164 /73 /80 1 85 200 220

Sugar $/mnt 8 1 632 90 277 200 221 267 293 260 232 243 268 34-4Beef 4/kg 130 276 215 256 246 262 233 /9/ 183 2/0 236 259 305Shnmp 4/kg 278 1,023 1.049 1,079 1,095 1,139 1,308 /,342 1,250 /,320 1,370 1,422 1,517

Bananas $/Mt 165 379 378 541 473 443 439 445 475 460 463 486 546Oranges $/Mt 168 391 398 531 489 433 411 53/ 480 487 493 525 586

Rice $/Mt 126 411 197 271 268 235 268 321 360 345 330 330 348Wheat $/Mt 55 /73 136 /36 /5/ /40 /50 177 215 185 /65 /60 /60Maize $IMt 5 8 /25 112 109 /04 102 /08 123 /80 /50 130 125 /25Grain sorghum $/Mt 52 129 103 /04 /03 99 104 119 /75 /46 /26 1/8 /22

Fats and oilsPalmaoil $/Mt 260 584 50/ 290 394 378 528 628 5/0 460 445 420 433Coconut oil $/mt 397 674 590 337 578 450 608 670 755 730 700 740 706Groundnut oil $Imnt 379 859 905 964 6/0 739 1,023 99/ 9/0 860 780 770 649Soybean oil $IMt 286 597 572 447 429 480 6/6 625 575 590 570 560 577

Soybeans $IMt 117 296 224 247 236 255 252 259 312 300 290 300 332Copra $/Mt 225 453 386 23/ 380 295 4/7 439 49/ 475 455 420 496

Groundnut meal $Imnt /02 240 /43 /85 /56 /68 /68 /69 180 /79 173 2/6 270Soybean meal $/Mt /03 262 /57 209 204 208 /92 /97 255 240 230 250 274

Nonfood agilcultureCatton 4/kg 63 205 132 /82 /28 /28 /76 2/3 179 /76 /87 /96 216Rubber 4/k 4/ /42 76 86 86 83 113 /58 144 143 /41 143 /69Tobacco $/Mt 1,076 2,276 2,6/2 3,392 3,440 2,695 2,639 2,639 2,890 2,900 2,925 2,975 3,100

TimberLogs (Meranti) $/cum 37 /96 /22 /77 210 390 308 256 255 265 280 300 360Logs (Sapelli) $/cum, 43 252 /74 344 33/ 3/0 330 340 270 290 315 370 450Sawnwood $/cum 175 396 307 533 607 758 82/ 740 745 765 790 850 1,000

Metals and mineralsCopper $/Mt 1,413 2/182 1,417 2,662 2,281 1,913 2,307 2,936 2,249 1,984 2,072 2,166 2,5/13Tin 4/kg 367 1,677 1,154 609 610 56/ 546 62/ 628 628 628 66/ 790Nickel $/Mt 2.846 6,519 4,899 8,864 7,001 5,293 6,340 8,228 7,700 7,800 7,900 8,100 9,138

Aluminum $/Mt 540 1,775 1,041 1,639 1,254 1,139 1,477 1,806 1,540 1,650 1,750 2,000 2,000Lead $IMt 304 906 39/ 8/I 541 406 548 63/ 785 780 720 675 684Zinc $/rnt 295 76/ 783 1,513 1,240 962 998 1,031 1,020 1,070 1,090 1,125 ,1,255

Iron ore i/DMTU 9.84 28.09 26.56 30.80 31.62 28.14 25.47 26.95 28.57 29.00 29.50 30.50 32.94

Gold $AoZ 36 608 3/8 384 344 360 384 384 395 4/0 420 435 450Silver 4AOZ 177 2,064 6/4 482 394 430 528 5/9 540 555 570 575 590

FertilizersPhosphate rock $/Mt II 47 34 4/ 42 33 33 35 39 40 40 4/ 44Urea $IMt 48 222 /36 /57 140 /07 /48 2/2 2/0 /90 /80 174 /87TSP $IMt 43 /80 /2/ /32 /2/ 112 /32 /50 170 /60 /55 153 /58DAP $/Mt 54 222 /69 /7/ /45 /29 /73 2/7 220 210 210 /98 209Potassium chlondea $/Mt 32 116 84 98 112 /07 /06 1/8 117 119 /20 /27 /35

..Not available.Note: Computed from unrounded data. Forecast as of July 26, /996.a. A4iso known as munate of potash.Source- World Bank, International Economics Departmient, Commodity Policy and Analysis Unrt.

AUGUST 1996 35


TABLE A3. WEIGHTED INDEX OF COMMODITY PRICES IN CURRENT DOLLARS AND IN CONSTANT 1990 DOLLARSl990= / 00

Agriculture

Nonfuel Food Raw materials Metalscomma- and

dities Total Total Groins Fats and oils Other Beverages Totol Timber minerals FertilizersYear Petroleum (100.0) (69,/)a (29.4)1 (6.9)1 (l0 Q)1 (12 4)" ( 6 9)"' (22.8)1 (9.3)a (28.1)" (2.7)a

Current dollars

1980 161 I 125.8 1 38.2 /37 5 134 3 148 6 1 30.2 185.1 104.3 79.0 95 1 128 9

1985 I 8.8 91 4 100.1 85.4 89.2 113.0 60.6 165.3 70 8 59 I 70.2 89.0

1990 100.0 100.0 100.0 100.0 100 0 100 0 100.0 100.0 100.0 100.0 /00 0 100 01991 84.7 95.5 97.9 99.2 101.7 /04.5 93.3 93 8 99 1 104 2 88 9 102,41992 83.1 92.1 94.4 100 0 101 7 111.7 89.5 79 4 98.3 114 5 86.1 95.81993 73.6 91.6 99.1 98.6 93 6 111,5 90.7 84.9 110.3 152.4 74 0 83 71994 69.4 11I 9 123.7 106.8 102.1 126.0 93 8 150 4 125.8 156.6 84.6 93.41995 75. 1 122 3 131.5 116.9 120.3 136'6 98 8 152.0 135.2 139.5 101.6 103 61996 79.8 115.4 126 0 124.7 149.8 144.0 94.7 125 2 128.3 140 3 89,5 117.01997 72.1 111.7 121.0 117.1 133.0 135.8 92.8 116.8 129 3 144.3 88 5 113.11998 69.9 111.8 120.0 113.6 121.1 130 6 95.5 114.2 1 32.5 149.5 91.7 1/0 7

2000 74 3 116 7 124.5 116.4 1/8.5 134.1 100 7 119 2 138.9 160.7 98.2 110.6

2005 83.0 129.1 1 38 8 1255 121.5 142.0 114.2 133 0 160.3 189.6 106.6 /15.8

Constant 1990 dollars

1980 223.8 174.7 191 9 191/0 186.5 206.4 /80.8 257.2 144 9 109.7 132.1 179.0

1985 173 2 1 332 /45.9 124.5 /30.0 164.8 88 3 241.0 /03.3 86.1 102.3 129 8

1990 /00.0 /00 0 100.0 /00 0 /00.0 /00.0 100.0 100.0 100 0 /00 0 100.0 100.01991 82 8 93.4 95 7 97 0 99.5 102.2 91.3 91.8 97 0 /02 0 87.0 100.21992 78.0 86.4 88.6 93.8 95 4 104.8 84.0 74.5 92.2 /07.4 80.8 89 9/ 993 69.3 86 2 93.2 92 7 88.1 /04 9 85.3 79.9 103.7 /43.3 69.6 78 71994 63.0 101.6 112 3 97.0 92.6 114.3 85.2 / 365 114 2 142/1 76.8 84.71995 65 2 I06.3 114.3 /0/ 6 /04.6 118.7 85.9 /32.0 . 117.5 121.2 88.3 90 0/996 67.0 97.0 /05S.9 104 8 /25.9 121.0 79.6 /05.2 107.8 117 9 75 2 98.31997 59.2 91.7 99 4 96 I /09.2 /11.5 76.2 95.9 /06.2 /18 5 72.7 92.91998 55 9 89.4 96.0 90.9 96.9 /04 5 76.4 91.4 /06.0 1 19.6 73.3 88.6

2000 56.5 88 8 94 7 88 6 90.2 102.1 76.6 90.7 /05 7 122 3 74.8 84 2

2005 56.1 87.2 93 7 84 7 82.0 95.9 77.1 89.8 /08 3 128 0 72 0 78.2

Note- Figures far /1996-2005 are projections Weights used are the average I1987-89 export values for low- and midd/e-income economies Forecast as of July 26, 1996a. Percentage share of commodity group in nonfuel indexSource World Bank, Interriational Economics Depatnment, Commodity Po/icy and Analysis Unit

TABLE A4. INFLATION INDICES FOR SELECTED YEARS

G-5 M UV index' US GDP deflator

Year /990= /00 % change /990=/100 % change

1980 71.98 64.54

1985 68.61 -0 95 83.77 5.35

1990 /00.00 7.83 /00 00 3 61199 1 102 23 2.23 /03.95 3 951992 106.64 4.31 106 84 2 781993 106.33 -0 29 109.62 2.601994 / 10.21 3.65 1 12.18 2.34/995 1 15.18 4.51 114.85 2 381996 118 52 2 90 117.61 2.401997 120.91 2.02 121.13 3.001998 123.48 2 /2 124.53 2.80

2000 129.26 2.3/1 131.21 2.65

2005 144.31 2.23 1 53 74 3.22

Note: F.gures far 1996-2005 are projections. Forecast as of July B. /1996. Growth rates for years 1 985, 1 990, 2000, and 2005 are compound annual r-ates ofchange between adlacent end-point years. all others are annual growth rates from the previous year.a. Unit value index in US dollar terms of manufactures exponted from the G-5 countries (France, Germany, Japan, UK, and US), weighted proportionally so thecountnes' exports to the developing countnesSource: G-5 MLIV index, G-5 GDP/GNP deflator, and G-7 CPI. World Bank US GDP deflator: US Department of Commerce



TABLE A5. COMMODITY PRICE PROBABILITY DISTRIBUTIONS IN CONSTANT 1990 DOLLARS

70% probability distnrbuuon

Commodity Unit 1996 1997 1998 2000

EnergyPetroleum $/bbl 12.66-18.35 9.84-17 99 9.31-17.98 8.74-17 95Coal $/mt 27.00-40.50 25 64-42 18 24.98-43.04 23 63-44.45Natural gas, US $/mmbtu 1.77-2.53 1 32-2 15 1.13-2.11 1.08-2.32Natural gas, Europe $/mmbtu 1.98-2.66 1.65-2.81 1 50-2 83 1.35-2.82

FoodCoffee (other milds) ¢/kg 187-256 151-235 130-227 119-233Coffee ( robusta) /kg 137-190 115-180 104-179 95-186Cocoa /Ag 114-133 106-152 104-158 100-172Tea /Ag 134-159 134-160 130-168 132-178

Sugar (world) $/mt 198-241 157-230 153-238 149-259Beef Ckg 129-184 132-219 143-248 141-301Shnmp Vlkg 1,017-1,139 926-1,381 858-1,535 803-1,705

Bananas $/mt 369-433 323-438 300-450 282-470Oranges $/mt 373-437 342-463 319-479 305-508

Rice $/mt 249-358 217-360 192-347 166-370Wheat $/mt 149-214 116-193 96-174 80-171Maize $/mt 134-170 99-149 80-133 68-131Grain Sorghum $/mt 130-165 96-144 78-129 64-123

Fats and oilPalm oil $/mt 388-536 306-521 279-514 227-487Coconut oil $/mt 553-764 488-790 445-769 401-859Groundnut oil $/mt 667-894 595-959 510-915 417-894Soybean oil $/mt 426-586 385-653 348-664 303-650Soybeans $/mt 229-327 198-327 178-332 162-348Copra $/mt 364-516 331-521 300-518 227-520Groundnut meal $/mt 127-190 115-202 100-205 1 17-251Soybean meal $/mt 186-257 161-261 142-259 135-290

Nonfood agricultureCotton ¢/kg 136-165 124-168 121-182 114-190Rubber - v/kg 112-131 95-139 89-137 79-133Tobacco $/mt 2,159-2,633 2,039-2,758 1,895-2,843 1,726-2,877

TimberLogs (Meranti) $/cm 198-231 183-262 184-280 177-304Logs (Sapelli) $/cm 210-244 200-287 207-315 219-375Sawnwood $/cm 583-677 528-757 519-789 502-861

Metals and mineralsCopper $/mt 1,612-2,144 1,346-1,969 1,309-2,031 1,206-2,094Tin ¢/kg 477-583 441-597 412-605 383-639Nickel $/mt 5,847-7,146 5,483-7,419 5,182-7,613 4,700-7,833Aluminum $/mt 1,197-1,393 1,140-1,634 1,149-1,748 1,181-2,027Lead $/mt 596-729 548-742 472-694 392-653Zinc $/mt 775-947 752-1,018 715-1,050 653-1,088Iron Ore V/DMTU 21.68-26.58 20.43-27.62 19 36-28 43 17.72-29.48

Gold $Aoz 273-393 258-427 245-439 231-442Silver VAoz 374-538 349-578 332-595 296-593

FertilizersPhosphate Rock $/mt 27-39 25-42 23-42 21-44Urea $/mt 145-209 119-198 105-190 87-188TSP $/mt 118-169 101-167 90-163 77-166DAP $/mt 152-219 132-219 122-221 100-214Potassium chloridea $/mt 81-116 75-124 70-126 64-136

Note. Forecast as of July 26, 1996.a. Also known as munaae of potash.Source. Worid Bank, Intematonal Economics Department, Commodity Policy and Analysis Unit.

AUGUST 1996 37


TABLE A6. COMMODITY PRICE PROBABILITY DISTRIBUTIONS IN CURRENT DOLLARS

70% probability distnbution

Commodity Unit 1996 1997 1998 2000

EnergyPetroleum $/bbl 15.00-21.75 11.90-21,75 11.50-22.20 11.30-23.20Coal $/mt 32.00-48.00 31.00-51 00 30.85-53.15 30.55-57 45Natural gas, US $/mmbtu 2.10-3.00 1.60-2.60 1.40-2.60 1.40-3.00Natural gas, Europe $/mmbtu 2.35-3.15 2.00-3.40 1.85-3.50 1.75-3.65

FoodCoffee (other milds) f/kg 222-304 182-284 161-280 154-301Coffee (robusta) f/kg 162-225 139-218 128-221 123-240Cocoa f/kg 135-157 129-184 128-195 130-223Tea ¢/kg 159-189 162-194 161-207 170-230

Sugar (world) $/mt 234-286 190-278 189-293 193-335Beef f/kg 153-218 160-265 176-306 182-389Shrimp f/kg 1,205-1,350 1,120-1,670 1,060-1,895 1,038-2,204

Bananas $/mt 437-513 391-529 370-556 364-607Oranges $/mt 442-518 414-560 394-592 394-656

Rce $/mt 295-425 262-435 238-429 215-479Wheat $/mt 176-254 141-233 119-215 104-221Maize $/mt 158-202 120-180 99-164 88-169Grain Sorghum $/mt 154-196 116-175 96-159 83-159

Fats and oilPalm oil $/mt 460-635 370-630 345-635 294-630Coconutoil $/mt 655-905 590-955 550-950 518-1,110Groundnut oil $/mt 790-1,060 720-1,160 630-1,130 539-1,ISSSoybean oil $/mt 505-695 465-790 430-820 392-840Soybeans $/mt 272-387 240-395 220-410 210-450Copra $/mt 431-611 400-630 370-640 294-672Groundnutmeal $/mt 150-225 139-244 123-253 151-324Soybean meal $/mt 220-305 195-315 175-320 175-375

Nonfood agricultureCotton f/kg 161-196 150-203 150-225 147-245Rubber f/kg 133-156 115-168 110-169 103-172Tobacco $/mt 2,559-3,121 2,465-3,335 2,340-3,510 2,231-3,719

TimberLogs (Meranti) $/cm 235-274 221-317 227-345 229-393Logs (Sapelli) $/cm 249-289 242-347 255-389 282-485Sawnwood $/cm 691-803 639-916 640-975 649-1,113

Metals and mineralsCopper $/mt 1,911-2,541 1,627-2,381 1,616-2,508 1,559-2,707Tin f/kg 565-691 534-722 509-747 496-826Nickel $/mt 6,930-8,470 6,630-8,970 6,399-9,401 6.075-10,125Aluminum $/mt 1,418-1,651 1,378-1,975 1,419-2,159 1,527-2,620Lead $/mt 707-864 663-897 583-857 506-844Zinc $/mt 918-1,122 910-1,231 883-1,297 844-1,406Iron Ore V/DM1TU 25 70-31.50 24.70-33.40 23.90-35.10 22.90-38.10

Gold $Aoz 324-466 312-517 302-542 298-572Silver ¢/oz 443-637 422-699 410-735 383-766

FertilizersPhosphate Rock $/mt 32-46 30-50 29-52 27-57Urea $/mt 172-248 144-239 130-234 113-244TSP $/mt 139-201 122-202 112-202 99-214DAP $/mt 180-260 160-265 IS1-273 129-277Potassium chlonde' $/mt 96 138 90-150 86-156 83-175

Note: Forecast as of July 26, 1996a. Also known as murate of potash.Source. Word Bank, internationa Economics Department, Commodity Policy and Analysis Usit.



TABLE A7. RECENT COMMODITY PRICES

Annual averages Quarterly averages Monthly overages

Jan-Dec Jan-Dec Jan-Jun Apr-Jun Jul-Sep Oct-Dec Jon-Mar Apr-Jun Apr May JunCommodity Unit 1994 /995 /996 1995 1995 /995 1996 1996 1996 1996 1996

BeveragesCocoa 4/kg 139.6 /43.2 142.9 144 8 139 1 140 3 35 3 150.6 145.6 /52.4 153.8CoffeeOther milds 4/kg 330.8 333.2 269 6 367 4 318 4 263.6 261 3 278.0 272.3 285 0 276.6Robust' 4/kg 262.0 277.1 200.5 304 6 268 2 232 5 204 2 /96 9 199.9 201.1 /89.8

Tea 4/k 183.2 164.3 173.1 1 59.4 /53.0 /77 0 /736 /72 7 170.9 /76./ 171.2

CerealsGrain sorghum $IMt 103.9 119.0 171/5 /08 I 121.7 /44.0 /60.0 183.1 188.7 /85 8 /74 9Maize $/Mt /07 6 / 23.5 /83.0 113.7 /28.0 144.5 /68.6 197 3 /90 4 204 0 /97.6Rice: Thailand5% BOT' $/Mt 357.2 327.7 362.7 298.8 347 9 380.8 372.7 352.8 352.0 351.3 355.05% Indicative $/Mt 267 6 32/ 0 349 6 299.5 348.3 354.9 365.6 333.6 327.2 332 3 34/1 535% Indicative' $/Mt 21/8.5 290 2 292.1/ 270.7 31/7.1/ 3/19.3 31/1I.6 272 6 271/ 2 272.0 274.8A/ Speciala $/Mt /82 3 262 8 252.8 246.7 288.9 290 / 262 5 243 2 24-48 244.5 240.3WheatCanada' $/Mt /98.6 207.1 254.9 /94 2 22/ 6 232 2 232 6 277.2 266.1 291.5 273.9U.S. HRW $/Mt 149 7 /770 23 1.4 /59.2 /89.6 205.5 2/3 7 249 0 257.6 '262.1 227.3U.S SRWVI $/Mt /38.6 /67.4 208 0 /45 8 /75.8 /99.2 202.2 2/3.9 247.5 2/3.4 180.6

Fats and oilsCopr-aa $IMt 417.3 438.5 487 3 4/6 0 452.0 473.3 464.0 5/0.7 479.0 503.0 550 0Soybeans $IMt 25/.8 259.3 307.5 250 3 261/ 3 283 0 299.7 3/ 5.3 3 1 6.0 322.0 308.0Coconurt oil $IMt 607 5 669.6 753.8 634 3 685 3 728 7 724 0 783 7 756.0 778.0 81/7.0Groundnut oil $IMt 1 022.8 990.9 91/5 2 973 0 976.7 99/.0 931.7 898.7 895.0 897.0 904.0Pa/rn oil $/Mt 528.4 628.3 532.5 622.3 61/9.0 604.0 524.0 541.0 562.0 552 0 509 0Soybean oil $/Mt 61/5.6 625.1 562.8 605.3 61/8.7 6 /13.3 546.7 579.0 582 0 591/ 0 564 0Groundnut meal' $/Mt /68 3 /68.6 202.0 /56 7 /66 0 /843 /86 3 2/7 7 2/3.0 230.0 2/0.0Soybean mea/ $/Mt /192.4 1 96.9 261/.0 80 7 /96.3 229.7 253.0 269.0 270.0 271/ 0 266 0

FisheriesShrimp' 4/Ikg /307.5 1341.5 1284.5 /464.7 /340.4 1229.1 1203.0 1365.9 /289.7 / 393.3 /414.6Fish meal' $/nnt 376.3 495.0 602.7 450.0 500,0 590.3 635.3 570.0 583.0 564.0 563.0

FruitsBananas $/Mt 439.8 445 1 521.6 382.6 525.1 427.3 501 4 541.8 605.2 535.7 484.6Oranges $/Mt 41/1.3 531.5 489.3 591.1 610.9 517.9 442.1 536.5 528.8 d 520 1 d 560 7

MeatBeef: U.S. 4/kg 233 I /90.7 /79.4 /84.0 /73.9 19/ 8 /82.5 /76.2 179.7 179 3 /69 7Lamb' 4/kg 297.5 262.1/ 297.5 256.6 254.0 264.7 262.6 332.3 309 2 334.4 353.4

SugarE,U. Domestic 4/kg 62.2 68.8 68.3 70.3 69.6 69.3 68 7 68 0 68.0 68.0 68.1U.S. Domest/c 4/kg 48.6 50.8 49.7 51.0 52.3 50.2 49 6 49.7 49.8 49.8 49.6World 4/kg 26.7 29.3 27.1 30.3 28.1 26.5 28.1 26.1 26 4 25 / 26.8

FibersCotton 4/kg /76.3 2/2.8 /84.9 234.7 193.7 197.1 187.0 /82.8 /82.5 /82.9 /82.9jutea $/Mt 298.3 368.0 5/3.8 330.2 4/8.7 466.7 525.4 502.3 524.3 5/0.0 472 5Sisal' $/imt 605.3 709.7 851I.7 700 0 71/5 8 735.3 843.3 860.0 860 0 860.0 860.0Woo/, 4/kg 389.3 488.3 420.4 5/12.8 487.9 430 4 430.0 4/0.8 408.4 4/0 0 414 /

RubberRSS/I: Malays/a 4/g 1 126 /58 0 /49.9 170.1 /32 6 155.3 /5S2.8 147.1 /45 7 /48 4 147.1Singapore' 4/kg 1/154 /60.3 /52.8 /72 6 /34 6 /56.5 /56.9 /48.7 /46 6 /53 2 /46.3U.S., 4/kg 13/1.6 181.4 /7/ 6 /93.7 /SS./ 176.5 /76 2 /66.9 / 65.5 /69.7 / 65.5

Metals and mnineralsAluminum $/Mt /476.8 /805.7 /575.4 /797.2 /836.4 /66/.7 /597.8 1 553 0 /587 2 /589 3 /482 5Capper $/Mt 2307 3 2935.6 2523.8 2890 5 3009 3 2905.7 2571.7 2475.8 2595.8 2658.3 2/73.4N/cke/ $/Mt 6339.8 8228.0 7979.7 7500.5 8648.8 82/9.5 8033.1 7926.3 8042 9 8026 5 7709 5T/n 4/kg 546.4 621.4 629.1 6/5 6 666.3 629.9 622.1 636.2 648.1 64/ 2 6/9 2Lead 4/kg 54.8 63.1 79.1 60.6 6/ 3 69.5 76.6 8/.7 8/.5 84 0 79.7Zinc 4/kg 99.8 /03 I /03.5 103.6 /00.9 /00.9 104.0 103.0 104.5 /03.6 /00.8Golda $Aoz 384.0 384.2 395.1 387.9 384.3 385.3 400.1/ 390.0 392.9 39/1.9 385.3Si/ver' 4Aoz 528 4 519.1 54/1.8 547.6 532.7 526.0 553 7 529.9 540.1 536.0 5/13.6Iron ore 4/DMTU 25.5 27.0 28.6 27.0 27.0 27 0 .28 6 28.6 28.6 28.6 28.6

AUGUST 1 996 39

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