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Commodity Prices End 2003 on a High Note, Growing 19.2 Per cent for the Year, Reports BMO Economic Group  

Commodity prices rose 19.2 per cent during 2003 and finished the year with a 5.2 per cent gain for the month of December, according to a new report from BMO Financial Group.  The BMO Commodity Price Index for December was 140.9 (1993 = 100).

“Commodity markets were very robust in 2003 with many commodity groups posting strong gains through the year,” said Earl Sweet, Assistant Chief Economist, BMO Financial Group.  “Looking ahead, we anticipate gains in 2004 to be more moderate, with non-energy commodity prices continuing to rise while energy prices should adjust downward from their current very high levels.”

In December, the Oil and Gas Index continued its upward movement, jumping 13.3 per cent to 225.3 (1993=100).  The substantial rise in the sub-index was due in large part to the whopping 22 per cent increase in the price of natural gas.  In December, the price for Empress Crude rose from US$4.19 per million British thermal units (approximately equal to a thousand cubic feet) to US$5.10.  Oil prices rose 3.9 per cent in December to US$32.19 from US$29.38/barrel In November.  Oil prices continued to surge higher during the first half of January, reaching the US$34/barrel mark.

“December’s increases in natural gas and crude oil prices were driven by concern over fuel inventories and the onset of much colder weather in major consuming regions,” said Sweet.

The BMO Metals and Minerals Index also continued to strengthen in the month, rising 6.4 per cent to 132.1 (1993=100).  Widespread increases, particularly in the second half of the year, lifted the sub-index by 25 per cent over the past twelve months.   In December, Nickel prices gained 20 per cent, with Copper up 8 per cent and Aluminum rising 3.3 per cent.

“Precious metals were pushed higher by the positive influence of the falling U.S. dollar on gold prices, while the improving economic climate in the United States and the rest of the world propelled industrial metals higher as well,” said Sweet. “The current trend should temper over the next few months although we expect prices generally will be higher over the next two years amid sustained increases in global economic production and tight supply conditions for some metals.”

After making dramatic gains over the past few months, the Forest Products Index gave up 2.5 per cent in December, ending at 103.9 (1993=100).  The sub-index is still 20 per cent higher than in December 2002.

“Between the middle of November and the middle of December, prices of oriented strandboard and softwood plywood fell by as much as 50 per cent, one of the sharpest declines we have ever seen,” said Sweet.   “If pulp and paper prices had not held steady we could have a seen a much more dramatic fall of the Forest Products sub index in month.”

Agricultural prices fell 3.1 per cent in December to finish at 100.9 (100=1993), down 0.7 per cent for the year.  Agricultural was the only sub index, which did not post major increases in 2003.  Wheat prices declined 3.8 per cent in December to US$4.42/bu. Canola prices, constrained by the rising Canadian dollar, fell 2.2 per cent in the month to C$366/tonne.

“The demand for major grains and oilseeds is expected to rise in 2004, which, combined with low inventories relative to consumption, should mean that prices will stage a comeback during the year,” said Sweet. 

BMO Commodity Index for December 2003

Dec.  2003 Level

(1993 = 100)

Per cent change

from month ago

Per cent change

from year ago

All Commodities




Oil & Gas




Metals & Minerals




Forest Products








The full BMO Financial Group December 2003 Commodity Price Index report is available on the BMO website at