Metals, grains lead commodity index

Surging metal and grain prices in June helped the Bank of Nova Scotia’s all-commodity price index increase by 5.8% compared with May. Metals and minerals prices were up 5.4%, while agricultural prices jumped 13.7%.

Metal and mineral prices raced ahead in June to a level 65% higher than a year earlier, reports bank economist Patricia Mohr. Aluminum, in particular, performed well; aluminum smelter capacity utilization is about 95% in the non- Communist world, and demand is growing rapidly, especially for beverage cans and machinery and equipment. Zinc prices also were considerably stronger.

Although metal prices have eased since late June with the normal summer slowdown in buying and less investor demand alongside a temporary easing of financial market concern over United States’ inflation prospects, Mohr says metal prices will probably firm again in the autumn. Positive fundamentals for metals — international demand growth and tight supply — remain in place.

During the second quarter of this year, the GNP in the U.S. grew at an annualized rate of 3.1%. Business investment during the quarter was up also, tracked at an annualized rate of 14%, and substantial increases were recorded in durable goods orders in such areas as defence capital, transportation equipment, and machinery and equipment.

The all-commodity index tracks export prices of a variety of Canadian commodities, which are weighted according to their 1984 export values.