Have commodity prices bottomed?
If you have been folowing the commodities market, you would have noticed that most commodities have been rallying of late. This includes oil, silver, gold, base metals and agricultural commodities. Oil has gone from the low 30s to threatening to pass $50 a barrel. I had predicted a decline to $25 before oil rose to $55 a barrel. It’s looking like the bottom is in for oil.
The question is whether this rally has legs. Looking at the Baltic Dry Index it may well do. The index is a common measure for shipping costs and it is at its highest level since October.
On the whole, I tend to believe the economy will remain in the doldrums throughout 2009. The International Monetary Fund has recently predicted that the global economy will register a decline in GDP for the first time in 60 years. However, that is not a foregone conclusion. If the commodities trend holds, it may signal an uptick in the global economy.
Update 11 Mar 2009: Below is a good link to more on The Baltic Dry Index, from an article which appeared today.
Understanding the Baltic Dry Index – The Daily Angle