Commodity Markets Review

Commodity Markets Review January 14, 2011 Non-energy commodity prices rose for a sixth straight month in December, up 4.8 percent, despite a 3 percent gain in the value of the dollar versus the euro. For the year 2010, non-energy commodity prices were up 32 percent (compared to December 2009), with strong gains in most main indices. Crude oil prices increased 6.5 percent in December, up for a fifth month, averaging $90.0/bbl. For much of 2010, oil prices were quite stable, but a rise in the fourth quarter helped generate a 20 percent gain for the year. In early January crude prices rose above $94/bbl, with Brent topping $98/bbl. Strong global distillate demand continued to pull crude prices higher, partly due to cold weather. The price of WTI in the U.S., however, has been atypically lagging Brent by some $6/bbl recently due to high stocks in Cushing OK, the delivery point for the WTI futures contracts on the NYMEX. Although total U.S. stocks have been declining seasonally in recent weeks, they remain high. Natural gas prices in the U.S. jumped 13.7 percent in December due to strong demand because of cold weather. For the year, gas prices declined 21 percent as unconventional shale gas production continues to grow at relatively low prices. Coal prices rose 7.3 percent in December due to flooding in Australia that affected rail transport and mine production. Wet weather also disrupted output in Colombia and Indonesia. DECPG, The World Bank Agriculture prices rose 5.4 percent in December, up for a seventh straight month, and 28 percent for the year. The largest annual gains were for raw materials (cotton and rubber) and fats & oils. The latter also led the way in December, with coconut and palmkernel oil prices up 12-13 percent on lower palmkernel output in Asia. Palm oil and soybean oil prices were higher on weather-related supply problems for palm oil in Indonesia, and deteriorating soybean crops in Argentina. Wheat prices rose 12 percent on lower exports by key producers. Rubber prices increased 10 percent on supply shortfalls in Asia, while cotton prices rose 9 percent on low stocks and supply constraints. Base metal prices rose 6.0 percent in December, up for a sixth straight month, and 26 percent for the year. The largest annual increase was for tin, up 68 percent, due to strong demand in China and lower output in Indonesia and China. Among precious metals, silver prices surged 66 percent in 2010 on strong investment demand, while gold prices were up 23 percent to a record nominal high. In December, silver prices recorded the strongest gain of all metals, up 11 percent, on continued strong investor interest as a hedge against various financial and political concerns. Copper prices rose 8 percent to a record nominal high, as supplies continue to be constrained, the latest incident being closure of a main port in Chile due to an accident. 400 350 Major Price Indices Indices of Nominal US$ Prices (2000=100) Base Metals 300 275 Agriculture Prices - Sub-Indices Indices of Nominal US$ Prices (2000=100) Beverages Raw Materials 300 250 250 Energy 225 200 Food 200 Agriculture 175 150 150 100 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 125 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Prepared in the Development Economics Prospects Group (DECPG) by Shane Streifel, John Baffes and Betty Dow. Katherine Rollins is task assistant. 1

Major Movers December 1 Natural gas (U.S.) prices jumped 13.7 percent due to strong heating demand because of cold weather, although stocks remain high. Coconut oil and palmkernel oil prices (close substitutes) rose 13.4 percent and 11.9 percent, respectively, due to strong demand and belownormal production of palmkernel oil. Wheat prices surged 11.8 percent on lower exports by key producers, including Argentina, Australia, and Kazakhstan. Palm oil and soybean oil prices (close substitutes) rose 10.7 percent and 6.0 percent, respectively, because of weather problems in Indonesia affecting palm oil supplies, and a deteriorating soybean crop in Argentina. Silver prices climbed 10.5 percent due to strong investment demand as a hedge against various macroeconomic and political concerns. Rubber prices leapt 10.1 percent due to strong demand, especially in China, and weatherrelated supply problems in south-east Asia. Sorghum and maize prices increased 9.0 percent and 5.1 percent, respectively, due to a small reduction in global supplies, particularly ending stocks of coarse grains in key exporting countries. Beef prices rose 8.9 percent because of heavy rain and flooding in eastern Australia which hampered transport and livestock supplies. Cotton prices increased 8.6 percent on relatively low global stocks, supply constraints, and robust demand. Copper prices rose 8.0 percent to record nominal highs and above $9,600/ton in early January as the market continues to be affected by supply constraints, the latest being closure of the main port of the Collahuasi mine in Chile. Coal prices increased 7.3 percent due to supply disruptions from flooding in Australia that has affected rail transport and mine production. Crude oil prices rose 6.5 percent on strong global distillate demand, partly because of cold weather in the northern hemisphere. Coffee arabica prices increased 6.3 percent due to adverse weather conditions in Colombia, the world's second largest arabica supplier. 1 Percent change of average December 2010 prices compared to average November 2010 prices in nominal U.S. dollars (graph includes 12-month changes in grey). Sugar prices rose 6.2 percent on strong demand and poor crop prospects by major exporters, including Australia and Brazil. Nickel prices rose 5.2 percent on a rebound in stainless steel demand and nickel imports in China. Cocoa prices increased 5.1 percent owing to the political crisis in Côte d'ivoire, which has disrupted cocoa exports. Natural gas (LNG) prices rose 4.9 percent on strong demand, partly owing to cold weather, and liquefaction outages that limited supply. Soybeans prices increased 4.0 percent due to falling stocks in the U.S., Argentina, and Brazil, and plummeting crops in Argentina. Natural gas, US Coconut oil Palmkernel oil Wheat, US, HRW Palm oil Silver Rubber, Singapore Sorghum Beef Cotton, A Index Copper Coal, Australia Crude oil, average spot Coffee, arabica Sugar, world Soybean oil Nickel Cocoa Maize LNG Soybeans Potassium chloride Rice, Thai, 5% Tin Urea, bulk TSP Coffee, robusta Natural gas, Europe Lead Gold Groundnut oil DAP Soybean meal Aluminum Tea, avg 3 auctions Phosphate rock Zinc Sawnwood Malaysia Logs, Malaysia December Percent Changes in Price (Nominal US $) -20 0 20 40 60-21.0 123.3 119.5 66.5 69.4 121.0 Dec '10/Nov '10 Dec '10/Dec '09 68.3 103.7 68.4 2

COMMODITY PRICE DATA Annual averages Quarterly averages M onthly averages Jan-Dec Jan-Dec Jan-Dec Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Oct Nov Dec Commodity Unit 2008 2009 2010 2009 2010 2010 2010 2010 2010 2010 2010 Energy Coal, Australia a/ $/mt 127.10 71.84 98.69 77.66 95.19 99.49 93.55 106.54 97.45 107.16 115.00 Crude oil, avg, spot a/ $/bbl 96.99 61.76 79.04 75.50 77.06 78.18 75.51 85.42 81.72 84.53 90.01 Crude oil, Brent a/ $/bbl 97.64 61.86 79.64 74.97 76.65 78.69 76.41 86.79 82.92 85.67 91.80 Crude oil, Dubai a/ $/bbl 93.78 61.75 78.06 75.46 75.86 77.98 74.04 84.37 80.34 83.70 89.07 Crude oil, West Texas Int. a/ $/bbl 99.56 61.65 79.43 76.08 78.67 77.85 76.08 85.09 81.90 84.24 89.15 Natural gas Index a/ 2000=100 267.9 153.5 156.3 149.4 170.3 147.5 155.1 152.3 144.9 151.6 160.3 Natural gas, Europe a/ $/mmbtu 13.41 8.71 8.29 7.81 8.84 7.51 8.26 8.54 8.29 8.59 8.74 Natural gas, US a/ $/mmbtu 8.86 3.95 4.39 4.36 5.15 4.32 4.28 3.80 3.43 3.73 4.24 Natural gas LNG, Japan a/ $/mmbtu 12.53 8.94 10.95 9.33 10.32 10.95 11.22 11.33 11.13 11.15 11.70 Non Energy Commodities Agriculture Beverages Cocoa b/ c/kg 257.7 288.9 313.3 341.8 329.7 321.0 305.9 296.6 292.7 291.0 306.0 Coffee, Arabica b/ c/kg 308.2 317.1 432.0 341.7 353.7 392.0 468.5 513.8 479.8 514.7 547.0 Coffee, robusta b/ c/kg 232.1 164.4 173.5 156.4 150.8 161.0 183.2 199.1 188.0 202.9 206.5 Tea, auctions (3), average b/ c/kg 242.0 272.4 288.5 301.9 279.0 276.4 295.1 303.7 303.5 302.7 304.8 Tea, Colombo auctions b/ c/kg 278.9 313.7 329.0 338.0 335.1 316.2 322.1 342.4 337.2 339.8 350.3 Tea, Kolkata auctions b/ c/kg 225.5 251.5 280.7 284.4 215.8 274.0 320.6 312.3 324.7 316.6 295.5 Tea, Mombasa auctions b/ c/kg 221.8 252.0 256.0 283.2 286.1 238.9 242.7 256.3 248.5 251.8 268.7 Food Fats and Oils Coconut oil b/ $/mt 1,224 725 1,124 734 834 955 1,159 1,546 1,412 1,512 1,715 Copra $/mt 816 480 750 491 557 634 769 1,038 947 1,013 1,154 Groundnut oil b/ $/mt 2,131 1,184 1,404 1,152 1,359 1,352 1,301 1,604 1,331 1,728 1,753 Palm oil b/ $/mt 949 683 901 732 808 813 875 1,108 987 1,109 1,228 Palmkernel oil $/mt 1,130 700 1,184 760 922 1,034 1,161 1,619 1,412 1,626 1,820 Soybean meal b/ $/mt 424 408 378 412 369 342 378 424 409 429 433 Soybean oil b/ $/mt 1,258 849 1,005 921 917 876 984 1,242 1,157 1,247 1,322 Soybeans b/ $/mt 523 437 450 439 417 409 452 522 493 526 547 Grains Barley b/ $/mt 200.5 128.3 158.4 145.5 143.6 146.9 161.9 181.1 174.6 179.1 189.6 Maize b/ $/mt 223.1 165.5 185.9 167.8 162.7 157.7 181.7 241.5 235.8 238.2 250.4 Rice, Thailand, 5% b/ $/mt 650.2 555.0 488.9 542.3 535.3 452.4 457.0 510.8 486.0 514.5 532.0 Rice, Thailand, 25% $/mt n.a. 458.1 441.5 462.8 477.0 399.1 418.5 471.4 457.0 477.5 479.8 Rice, Thailand, 35% $/mt n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. * Rice,Thai, A1.Special / Super $/mt 482.3 326.4 383.7 346.1 400.7 333.8 376.9 423.1 428.3 427.8 413.4 Sorghum $/mt 207.8 151.1 165.4 163.8 156.9 142.6 153.6 208.6 201.0 203.2 221.6 Wheat, Canada $/mt 454.6 300.5 312.4 283.4 279.0 260.9 326.1 383.6 365.6 376.2 408.9 Wheat, US, HRW b/ $/mt 326.0 224.1 223.6 205.4 195.4 177.4 237.9 283.6 270.2 274.1 306.5 Wheat US SRW $/mt 271.5 186.0 229.7 195.6 193.5 186.9 253.4 284.9 267.5 278.5 308.6 Other Food Bananas EU $/mt 1,188 1,145 1,002 1,032 1,014 1,029 933 1,033 1,003 1,035 1,062 Bananas US b/ $/mt 844 847 868 813 781 862 922 908 916 908 900 Fishmeal $/mt 1,133 1,230 1,687 1,535 1,660 1,814 1,663 1,613 1,710 1,609 1,520 Meat, beef b/ c/kg 313.8 263.6 335.1 273.5 314.2 342.4 330.9 353.2 341.2 343.9 374.4 Meat, chicken b/ c/kg 169.6 171.7 172.1 165.1 167.2 173.0 176.0 172.1 173.9 171.3 171.1 Meat, sheep c/kg 458.5 427.6 499.5 450.1 447.6 486.8 508.0 555.6 550.3 553.6 562.8 Oranges b/ $/mt 1,107 909 1,033 1,107 1,009 1,084 1,163 878 1,086 823 724 Shrimp, Mexico b/ c/kg 1,069 945 1,246 864 827 945 n.a. 1,222 1,179 1,240 1,246 Sugar EU domestic b/ c/kg 69.69 52.44 44.18 49.11 46.38 42.66 43.29 44.38 45.41 44.55 43.19 Sugar US domestic b/ c/kg 46.86 54.88 79.25 70.48 84.31 69.62 78.20 84.86 84.29 85.62 84.69 Sugar, world b/ c/kg 28.21 40.00 46.93 50.29 51.82 34.93 42.98 58.01 54.26 58.09 61.69 Raw M aterials Timber Logs, Cameroon $/cum 526.9 421.5 428.6 449.5 431.4 408.0 426.3 448.5 458.9 450.2 436.5 Logs, Malaysia b/ $/cum 292.3 287.2 278.2 271.1 253.6 253.5 293.5 312.1 316.4 313.3 306.5 Plywood c/sheets 645.5 564.6 569.1 558.4 557.2 566.3 572.3 580.5 578.2 581.0 582.4 Sawnwood, Cameroon $/cum 958.3 748.9 812.7 806.3 804.1 787.1 811.8 847.8 867.4 843.8 832.1 Sawnwood, Malaysia b/ $/cum 889.1 805.5 848.3 807.4 787.8 832.6 879.8 892.9 880.2 901.5 897.0 Woodpulp $/mt 820.2 614.6 867.6 715.6 780.9 875.5 912.9 900.8 915.3 897.2 890.0 Other Raw M aterials Cotton A Index b/ c/kg 157.4 138.2 228.3 157.7 178.8 199.3 205.2 330.1 279.0 341.0 370.3 Cotton Memphis c/kg 161.3 145.3 232.9 172.4 183.6 200.1 215.0 332.8 284.9 338.5 375.0 Rubber, US c/kg 284.1 214.6 386.6 284.7 345.2 381.5 360.7 459.1 422.8 464.3 490.3 Rubber, Singapore b/ c/kg 258.6 192.1 365.4 256.5 318.6 372.7 337.5 432.8 392.5 431.2 474.6 continued on next page a/ Included in the energy index (2000=100) b/ Included in the non-energy index (2000=100) c/ Steel not included in the non-energy index d/ base metals plus iron ore e/ Includes aluminum, copper, lead, nickel, tin and zinc $ = US dollar = US cent bbl = barrel cum = cubic meter dmtu = Dry Metric Ton Unit kg = kilogram mmbtu = million British thermal units mt = metric ton toz = troy oz n.a. = not available n.q. = no quotation 3

COMMODITY PRICE DATA Annual averages Quarterly averages M onthly averages Jan-Dec Jan-Dec Jan-Dec Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Oct Nov Dec 2008 2009 2010 2009 2010 2010 2010 2010 2010 2010 2010 Fertilizers DAP b/ $/mt 967.2 323.1 500.7 316.9 464.8 458.2 494.1 585.6 575.0 588.0 593.9 Phosphate rock b/ $/mt 345.6 121.7 123.0 90.0 102.1 125.0 125.0 140.0 140.0 140.0 140.0 Potassium chloride b/ $/mt 570.1 630.4 331.9 423.0 334.0 316.1 334.2 343.2 335.0 340.6 354.0 TSP b/ $/mt 879.4 257.4 381.9 235.7 316.9 357.4 389.6 463.8 455.0 463.8 472.5 Urea, E. Europe, bulk b/ $/mt 492.7 249.6 288.6 248.3 281.0 237.2 279.2 357.0 329.4 366.4 375.1 M etals and M inerals Aluminum b/ $/mt 2,573 1,665 2,173 2,003 2,163 2,096 2,090 2,343 2,347 2,333 2,351 Copper b/ $/mt 6,956 5,150 7,535 6,648 7,232 7,027 7,243 8,637 8,292 8,470 9,147 Gold $/toz 872 973 1,225 1,102 1,109 1,196 1,227 1,367 1,342 1,370 1,391 Iron ore b/ c/dmtu 140.6 101.0 161.7 101.0 101.0 152.0 212.0 182.0 182.0 182.0 182.0 Lead b/ c/kg 209.1 171.9 214.8 229.3 222.1 195.0 203.2 239.0 238.0 237.7 241.3 Nickel b/ $/mt 21,111 14,655 21,809 17,528 19,959 22,476 21,191 23,609 23,807 22,909 24,111 Silver c/toz 1,500 1,469 2,020 1,760 1,693 1,838 1,901 2,647 2,347 2,657 2,937 Steel products index c/ 2000=100 289 227 230 207 211 241 232 234 235 233 233 Steel cr coilsheet, Japan, Reinstc/ $/mt 966 783 816 700 725 838 850 850 850 850 850 Steel hr coilsheet, Japan, Reinstc/ $/mt 883 683 716 600 625 738 750 750 750 750 750 Steel, rebar, Japan, Reinstated c/ $/mt 760 486 563 522 546 621 533 550 550 550 550 Steel wire rod, Japan, Reinstatedc/ $/mt 1,010 969 712 814 751 767 678 653 660 650 650 Tin b/ c/kg 1,851 1,357 2,041 1,517 1,721 1,786 2,055 2,601 2,634 2,552 2,616 Zinc b/ c/kg 187.5 165.5 216.1 221.4 228.9 202.6 201.3 231.5 237.2 229.2 228.1 NEW World Bank commodity price indices for low and middle income countries( 2000 =100) Energy 342.0 214.3 271.1 256.1 266.1 267.7 259.5 291.2 277.7 288.6 307.3 Non Energy Commodities 272.0 213.2 269.8 235.2 244.2 252.2 275.5 307.4 296.2 305.6 320.2 Agriculture 229.5 197.8 231.3 212.6 216.6 215.4 228.6 264.6 251.5 264.0 278.3 Beverages 210.0 219.9 253.8 247.9 242.5 246.9 259.2 266.4 257.3 264.6 277.3 Food 247.4 205.1 224.1 213.7 213.1 201.0 222.0 260.3 248.6 259.3 273.1 Fats and Oils 277.3 216.2 244.4 224.5 224.7 219.7 241.1 292.1 269.7 293.8 312.8 Grains 281.7 214.9 215.8 210.8 205.1 186.6 212.5 259.1 249.5 255.9 271.8 Other Food 177.1 181.6 204.9 202.0 205.1 189.4 205.3 219.7 220.2 217.0 222.0 Raw Materials 195.7 168.7 237.4 192.0 211.9 234.4 229.2 274.1 255.7 275.2 291.4 Timber 150.5 138.9 143.5 137.3 132.7 138.6 149.4 153.3 152.1 154.5 153.2 Other Raw Materials 245.3 201.4 340.1 251.8 298.6 339.1 316.5 406.2 368.9 407.2 442.6 Fertilizers 566.7 293.0 280.0 242.8 259.0 253.3 278.5 329.3 315.3 332.7 339.8 Metals and Minerals d/ 325.7 235.6 347.6 280.8 299.0 327.5 371.4 392.5 385.7 387.8 403.9 Base Metals e/ 287.9 208.9 297.8 264.6 287.0 280.9 286.5 336.8 328.5 331.0 350.9 a/ Included in the energy index (2000=100) b/ Included in the non-energy index (2000=100) c/ Steel not included in the non-energy index d/ base metals plus iron ore e/ Includes aluminum, copper, lead, nickel, tin and zinc $ = US dollar = US cent bbl = barrel cum = cubic meter dmtu = Dry Metric Ton Unit kg = kilogram mmbtu = million British thermal units mt = metric ton toz = troy oz n.a. = not available n.q. = no quotation 4

Selected Commodity Prices, Nominal US dollars, 2005-2010 5

Selected Commodity Prices, Nominal US dollars, 2005-2010 Cont d 6

Selected Commodity Prices, Nominal US dollars, 2005-2010 Cont d 7