After several years of rising in price, everything seems to indicate that the commodity market will also be affected by the economic crisis. However, some experts predict a rebound effect on costs that could occur approximately within two years. This contrasts with the announcements of cuts in the production of aluminum, nickel and zinc, key ingredients for the steel industry.
Stephen Briggs, an analyst at RBS Global Banking & Markets, told Reuters that "the more prices fall and the longer they remain low, the stronger the rebound."
In recent years, the commodity market has been driven by investors looking to diversify stock portfolios after a stock market crash in 2000, and looking for high returns to support their balance sheets.
Because of this, many commodities hit record prices in July, despite signs of future economic problems. Oil rose to a record price of more than $147 in July, but has since fallen about 70 percent to just over $40 a barrel. To try to stem the slide, the Organization of the Petroleum Exporting Countries (OPEC) has already agreed to remove about 2 million barrels per day from global oil markets. But once global growth begins to recover, oil could rebound 40 to 80 percent in the span of six months.
But, the economic downturn does not affect all commodities equally. Cocoa, used for the manufacture of all kinds of chocolates, has risen by 21.94% in November and another 1.5% in December, compared to the decrease in that same month of 18.11% of Brent oil, 19.73% in West Texas or the decrease of almost 12% of copper and nickel or 4.88% of soybeans. This is mainly because Côte d'Ivoire, the world's leading cocoa producer, has cut shipments made in the current harvest.
In the case of gold, the decline was very little, from U$S 1,056 to U$S 800 a troy ounce. Soybeans fell from $600 to $314 a ton, the drop is almost 50% and is obviously deeper than gold, but less than oil. Oil was one of the hardest hit products, down from $147 to $45 a barrel, implying a 66% drop.
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