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Are Real Commodity Prices at multi-century Lows?

Posted By Barry Ritholtz On September 3, 2005 @ 2:15 pm In Commodities | Comments Disabled

The graph below, courtesy of BHP Billiton [1] CEO Chip Goodyear, was compiled from a variety of sources, including the US All Commodities Producer Price Index, US Consumer Price Inflation, US Bureau of the Census, Historical Statistics of the United States, and the Colonial Times, to 1970.

A small move on the graph represents several decades. According to the graph’s creator, "we find ourselves at a period of time which is, or rather close to it anyway, 2001/2002 when real [2] commodity [3] prices [4] were the lowest they’ve been in the last 200 years which essentially puts them at the lowest price they’ve been in known history.”

click for larger graph

Us_commodity_prices_cpi_adj [5]

Chart courtesy of Mineweb [6]


The  International Monetary Fund reached a similar conclusion — two years ago.

Cycles in Real Price of Industrial Commodities, 1862–1999

click for larger graph
Real_prices_commodities18621999_ [7]

Chart courtesy of IMF [8]

Notes: Shaded portions denote the boom phase, and unshaded portions the slump phase, of each
commodity-price cycle. A boom (slump) is defined as a sequence of absolute increases (decreases) in the real price of industrial commodities.


Nominal and Real Price Indexes Industrial Commodities, 1862–1999
click for larger graph

Nominal_vs_real_price_18621999_1 [9]


Chart courtesy of IMF [8]

The graph everyone’s talking about [6]
Barry Sergeant
Mineweb, ’25-AUG-05 11:00

The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability [8]
2002 International Monetary Fund

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/09/are-real-commodity-prices-at-multi-century-lows/

URLs in this post:

[1] BHP Billiton: http://www.bhpbilliton.com/bb/home/home.jsp

[2] real: http://www.ksg.harvard.edu/ksgnews/Features/opeds/041505_frankel.htm

[3] commodity: http://ideas.repec.org/a/imf/imfstp/v49y2002i2p2.html

[4] prices: http://www.amazon.com/exec/obidos/ASIN/1557754128/thebigpictu09-20

[5] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/us_commodity_prices_cpi_adj.jpg

[6] Mineweb: http://www.mineweb.net/sections/mining_finance/476223.htm

[7] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/real_prices_commodities18621999_.jpg

[8] IMF: http://www.imf.org/External/Pubs/FT/staffp/2002/02/pdf/cashin.pdf

[9] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/nominal_vs_real_price_18621999_1.jpg

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