Bulk Commodities Slumping
Chart of the Week 20 Nov, 2008
Earlier this week Malcolm Edey, Assistant Governor of the RBA, gave a speech at the Australia & Japan Economic Outlook Conference 2008 titled “The Economy in Late 2008: Conditions and Prospects”.
Amongst the vast range of data presented was a chart on pricing trends for the bulk commodities, which is displayed below:
Source: RBA
With spot prices dipping significantly below contract prices and numerous reports of cancelled shipments it appears that the upcoming annual contract negotiations will be challenging for suppliers.
Overall, Edey concluded his presentation by stating “…the forecasts that we released last week envisage a significant further slowing in the Australian economy from the pace recorded at mid year. Growth of non-farm GDP is now expected to reach a trough of 1 per cent in year-ended terms by the middle of next year, and to remain below trend for some time beyond that. Inflation is likely to fall. But it has to be emphasised that any forecasts in this environment are subject to a great deal of uncertainty, not least because the situation in world financial markets is still changing rapidly.”
