APRIL 2000 Number 2 20638 GLOBAL COMMODITY MARKETS A COMPREHENSIVE REVIEW AND PRICE FORECAST THE WORLD BANK rl,WI Commodities Teamn Oai Development Prospects Group ,0 The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONALDEVELOPMENTASSOCIATION Cable Address: INDEVAS May 18, 2000 Dear Global Commodity Market Reader: Over the past 18 months, we have tried to bring you a reasoned and informed view of commodity markets. Unfortunately, changing priorities and resource constraints make it impossible for us to continue the Global Commodity Markets report. From now on, the commodities team will focus more directly on analysis of critical issues related to trends in commodity markets and their effect on developing countries. This analysis will be available through the World Bank's Global Economic Prospects and Global Develop- ment Finance publications. 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ISSN 1020-721X ISBN 0-8213-4699-7 Contents Summary ............................... 7 Regional Price Indices. .............................. 9 Special Features Change in Commodity Production and Trade. . . . . . . . . . . . . . .10 Economic Outlook ................................... 12 Ocean Freight ................................ 13 COMMODITIES Energy Coal ................................... 16 Natural Gas ................................... 18 Petroleum ............ ...................... . 20 Non-Energy Agriculture Beverages Cocoa ................................... .... 24 Coffee ............................... 26 T ea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 8 Fats, Oils, and Oilseeds Fats and Oils ............................... 30 Coconut Oil ............................... 32 Palm Oil ............................... 34 Soybean Oil .................. .. ..............36 Soybeans ............................... 38 Grains Grains ............................... ....... 40 Maize .......................................42 Rice ........................................44 W heat .......................................46 april 2000 5 Contents (continued) Agriculture (continued) Other Food Bananas . . . . . . . . . . . . . . . . . . . . . . . . 48 Shrimp ........................ . DO Sugar . . . . . . . . . . . . . . . . . . . . . . . . 52 Agricultural Raw Materials Cotton.. ....................... 4 Rubber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Tropical Timber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Fertilizers Nitrogen.0. ....................... 6 Phosphates ........................ 62 Potash ........................ 64 Metals and Minerals Aluminum.. ....................... 6 C opper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 8 Gold.. ..................... 70 Iron Ore and Steel ................. ............. . 72 APPENDIX Commodity Price Data ...................... . 76 Commodity Prices and Price Projections in Current Dollars .78 Confidence Intervals for Price Projections in Current Dollars . 79 Commodity Prices and Price Projections in Constant 1990 Dollars. 80 Confidence Intervals for Price Projections in Constant 1990 Dollars 81 Weighted Indices of Commodity Prices and Inflation .82 TECHNICAL NOTES Description of Price Series.. 83 Definitions and Explanations. . . . 85 Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 This report was prepared by the Commodities Team of the World Bank's Development Prospects Group. The core team includes Donald Mitchell (Team I.eader),John Baffes and Shane Streifel (Economists), Betty Dow (Senior Information Analyst),Jean-Charles Le Vallee (Consultant), and Katherine Rollins (Team Assistant). The report was prepared wvith the assistance of Margaret Moss of \vwwgiglobal.com. Questions or comments should be e-mailed to gcm Ccvworldbank.org or visit us on the web at http://wTvxvworldbank.org/prospects/ 6 GLOBAL COMMODITY MARKETS SUMMLARY Summary agricultural prices were lower. The recovery of non- energy prices from the lows following the Asia crisis Crude oil prices surged higher during the first has been mixed, with metals and minerals prices in- quarter due to failing inventories and supply creasing 27% compared to one year ago, while agri- restraint by oilproducers. Prices are likely to cultural prices are still below their year-earlier levels. rise again later in the year unless OPEC further Stocks remain high for most commodities, but many increases production. The index of non-energy have declined or are expected to decline this year. For commodity prices was relatively unchanged example aluminum stocks have declned 4% compared from last quarter in what is seen as a pause in 'exme, alumicum stocks have dcmared the upward trend of commodity prices. to one year ago while copper stocks have remained Continued improvement in the global economy near last year's levels, but are expected to decline this is now being reflected in higher levels of trade year. Nickel and zinc stocks have fallen sharply over and consumption of commodities. Stocks of the past year while lead stocks continue to rise. Stocks many commodities have begun to decline and of agricultural commodities also showed mixed this is expected to lead to higher prices later this trends, with cocoa, coffee and sugar stocks still rising year. while cotton, grains, and soybean stocks are falling. Prices have responded to these trends, with prices con- Energy prices rose sharply during the first quar- tinuing to fall for cocoa, coffee, and sugar but rising ter, with petroleum prices up 12.3% compared to the for cotton, grains and soybeans. Grains and soybean fourth quarter and natural gas prices higher in both stocks have declined about 4% from last year's levels Europe and the US. Crude oil prices rose to $32/bbl and prices rose 4.8% and 7.2%, respectively, in the in early 1I\arch due to falling inventories and uncer- first quarter. tainty about OPEC supply. Prices then declined lead- The outlook for the global economy continues ing up to the OPEC meeting where quotas were in- to improve, with world GDP growth now projected creased by 1.7 mb/d from April 1, with prices falling to average 3.5% in 2000 compared to 2.9% in our last below $25/bbl by the end of the quarter. However, report. Developing country growth is now projected supplies are expected to tighten and prices could rise to average 4.6% in 2000 compared to a projected later in the year unless OPEC increases production. growth of 4.2% in our last report. Beyond 2000, GDP Non-energy commodity prices were up a mod- growth in OECD countries is projected to slow to est 1.1%, led by higher metals and minerals prices while 3.1% during 2001-02 while growth in developing Non-Energy Commodity Price Index (US $) (1990 = 100) 175 150 - -- - - 125 sa -- a-- v ~~~~Constat' , \, 100 75 Current- prices 50 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 Nsote: The constant price index is deflated by the MUV. Source: World Bank ap ril 2000 7 SUMMARY countries is projected to increase to 4.8% during this keting year compared to 1.0 percent in the previous year. period. Although systemic risks in the global environ- Soybean trade is projected to increase 6.9 percent compared ment have lessened, downside risks remain due to the to 3.1 percent last year. Many other crops show similar in- need to achieve four transitions simultaneouslv. These crease, with cotton trade projected to increase 8.3 percent are: a soft landing in the US, fiscal stimulus to private after falling 4.3 percent last year. Part of the increase is due demand-led growth in Japan, a healthier financial and to current low prices, and other factors including the severe corporate sector in Asia, and adjustment in the oil- drought last year in the Middle East which caused domestic exporting countries. Higher oil prices also pose some crop production to fall sharply. However, much of the additional risk to growth in the near term. increased import demand is also coming from the improved Continued improvement in the global economy economic oudook. For example, the Republic of Iiorea is has boosted commodity demand and this is beginning expected to increase maize imports from 7.5 million tons to be reflected in imports. Trade volumes have begun last year to 9.0 million tons this year. Russia is expected to to increase for many commodities and this is expected increase grain imports from 4.3 million tons to 6.3 million to support prices as stock levels for most commodities tons despite higher domestic grain production. continue to decline. Import demand is rising in several The outlook is generally for higher commodity prices groups of countries, including the oil exporting coun- for the balance of the year. Petroleum prices are ex- tries which are benefiting from higher oil prices, the pected to increase in the second-half of the year unless Asian crisis countries which are recovering from the OPEC members raise production. Metals prices are pro- 1997-98 economic downturn, and the countries of the jected to increase as demand increases and stock levels former Soviet Union, especially Russia, which has ben- fall. However, given the increases which have already efited from higher oil prices as well as an overall im- occurred, metals prices are not expected to increase sig- provement in its economic situation. Although it is dif- nificantly. Agricultural prices are expected to remain ficult to obtain recent trade data on commodities, the mixed, with prices of those commodities which have not USDA monitors trade for many agricultural commodi- yet seen production and stocks fall remaining weak while ties and revises its annual estimates monthlv in accor- commodities which have already seen reduced supply ex- dance with recent trends. For the current marketing pected to increase. Among agricultural commodities, year, the USDA has been increasing its trade estimates those which still face rising stocks include cocoa, coffee for many crops. For example, world grain trade is now and sugar while those with falling stocks include cotton, projected to increase 3.3 percent in the 1999/00 mar- grains and soybeans. Current and Previous Declines of Non-Energy Commodity Price Indices (Peak = 100) 105 95-May 1996- March 2000 85 ~~~June 1988 - <> ^S 80 Mayl1993 -> < g 75 70 65 , I I I I I I I I I I I 0 12 24 36 48 60 SoNrce: World Bank Months from Peak 8 GLOBAL COMMODITY MARKETS REGIONAL PRICE INDICES Regional Price Indices East Asia and Pacific 120 The index of non-energy conmnodity prices for developing countriesgrewl. 1% during the first 105 ---------------------------------- quarter compared to a 1.0% increase for the world ,- o't World index. There was considerable variabilitybetween 90 --------------- regions, with only the Latin America and Carib- - bean region showing an increase while the East - Asia and Pacific, South Asia, and Sub-Sahara Af- East Asia and Pa rica regions saw their exportprices fall. Export 60 . . , . . . . . .l ,. . . .l..I prices of the Latin America and Caribbean region Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 have fared relatively well for two quarters with a total gain of 9.l1% while the Sub Saharan Africa Latin America and Caribbean region has seen its export prices fall 6.6% over 140 two quarters. Latin America and Caribbean 120 - - - - - - - - - - - - - - - - Export prices of the East Asia and Pacific re- gion fell 1.2%, following last quarter's increase of 100 - ----------------- 3.7%. Price declines for the major exports of the region included palm oil (-6.8%) and logs (-4.8%/o) 80 -_--------- whilst price increases included copper (3.20/o), natu- ral rubber (3.0%), and rice (4.3%). 60 ,..... ..,., ........... I.... The Latin America and Caribbean region ben- Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 efited from higher export prices for the second con- South Asia secutive quarter with a gain of 2.3% following last quar- 120 ters gain of 6.8%. Price movements among important exports of the region were mnixed, with declines in sugar 105 - (-16.5%) and arabica coffee (-5.0%/o), and increases for SouthAsia soybean meal (6.8%), and metals and minerals (alumi- 90 ------------- num 9.5%, iron ore 4.3% and copper 3.20/0). The South Asia region had a 0.3% decline in the Worl non-energy commodity price index following a 1.1% 75 ----------------- decline last quarter. Tea prices at the Calcutta auctions were down 27.0% as lower quality teas were mar- Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 keted. Other commodites important to the region which had large price changes included cotton (15.00/%), Sub-Saharan Africa iron ore (4.3%) and rice (4.3%). 120 Prices of the Sub-Saharan Africa region had the largest decline among all regions for the second con- 105 -_-_ --- ----------------- secutive quarter at -3.6%, a total decline for the last Sub-Saharan Africa two quarters of 6.6%. The two most important non- 90 -------- energy export commodities for the region, cocoa and Worl , robusta coffee, saw their prices faUl 5.6% and 21.3%, 75 ------------------ - respectively. Sugar prices also fell 16.5%. Sustaining the export price index for the region were price in- 60 . u 1 . I creases in metals (aluminum 9.5% and copper 3.2%). Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Note: The regional price indices use the US$ non-energy com- moditv export basket of each region to compute the price index. This index is then compared with the index using global exports. april 2000 9 SPECIAL FEATURE Change in Commodity palm oil where production value has more than tripled - despite a halving of price - because of a more than Production and Trade 8-fold increase in production. Crude oil has retained the highest valued production of almost $500 bllfon Values and Concentration in 1996/97, as both production and real prices have risen by 40% and 275%. In 1970/71, the apparent Value of Production and Trade value of rice production was not that much lower than crude oil, but while production has doubled, real The apparent real value of production of 21 prices fell by over half. For some commodities - cop- commodities rose by 59% or $481 billion between per, iron ore, cotton, and coffee - the value of pro- 1970/71 and 1996/97. (Apparent value in table cal- duction has fallen, as the decline in prices has been culated by multiplying world production and trade greater than gains in physical output. volumes by spot prices - commodities ranked by value The apparent value of trade has risen twice as of recent production.) Virtually all of the growth has fast as production despite the drop in real prices for been the result of higher production volumes because most products. This reflects the growing share of real prices of nearly all commodities have fallen sig- trade in world economic activity, but also indicates nificantly over the period. Real prices have only risen the ability to supply a greater volume of primary com- for crude oil, gold and hardwood logs, and conse- modities at lower prices. The largest growth in value quently these commodities have shown the largest in- of trade was in aluminum, crude oil, fertilizers, palm creases in production value. The main exception is oil, and rubber - of these, real prices fell for all but APPARENT VALUE OF PRODUCTION AND TRADE AT EXPORT PRICES OF 22 MAJOR COMMODITIES (1970-71 & 1996-97 Averages) E; 70 . 1 ;avqgeQ, 1996-97 average SO 1 Trade Share of 1970-71 average cntI197current haeIn&t1nt Production US$ billillion$ ;;i $ billion e ' (percent) Production Trade PrIOn Production Trade PrQItionQQ Trade 1970-71 1996-97 Crude Oil 31.5 16.0 12. 496.1 262.9 2837 Q 93 50.9 53.0 Coal 35.1 2.7 147A, 11.2 135.5 17.6 7.6 13.0 Rice 25.5 1.0 07.5.4- 119.9 5.9 W '35.9 4.0 4.9 Wheat 19.0 3.1 , 9 , . .1. 106.0 18.4 3 . 16.4 17.4 Maize 16.8 2.0 70.84 8. 80.3 9.0 411.8 11.2 Hardwood Logs 9.2 1.7 .87 72i 75.0 4.3 91 -08 18.6 5.7 Soybeans 5.6 1.6 24 . 42.5 11.4 81~ 7~ 29.1 26.9 Cotton 8.5 2.7 3 1. 34.0 10.3 gQ 4.7 , . 32.3 30.2 Aluminum 5.9 1.6 2 68 32.3 19.6 298,, 27.3 60.7 Sugar 6.7 2.0 28.1 .8.3 31.4 9.0 118 8.3 29.6 28.7 Iron Ore 4.6 2.1 i, 1 . , 18.4 8.1 50 ,8 . 45.0 44.1 Copper 9.3 3.2 , 39.5 - Q 13.4 29.3 12.1 .; . K . *99 34.0 41.3 Bananas 4.9 0.9 ,M,R3;9 27.9 5.7 18.8 20.5 Gold 1.9 n.a 6.0 o.;. 25.0 n.a. n.a. n.a. Coffee 4.4 3.4 183 14.1 17.1 13.6 Q .0 77.0 79.1 Nitrogen fertilizer 1.6 0.3 ,. - - - 8 . . .4 13.9 3.7 1. 20.3 27.0 Palm Oil 0.5 0.3 2. 12 9.1 6.2 ~ 485 58.1 68.1 Natural Rubber 1.2 1.0 . 9:..44 75 5.3 ~ . 99 90.0 70.9 Phosphate fertilizer 1.0 0.1 .1,, , Q.7 5.8 2.0 1 , 7 513.8 35.0 Tea 1.1 0.5 .4i 6 Q2i3 5.0 2.1 : 8 7 50.3 41.7 Cocoa 0.9 0.7 4.0 3. ;. 40 2.9 . 77.0 71.9 Potash fertilizer 0.6 0.3 . 2.5 2.7 2.5 , 12 53.8 91.0 Total/Average 193.9 47.4 012.7 1S .0 1,293.8 432.6 R 2Q 1IB.5 24.4 33.4 Notes: For 1996-97 harwood logs refer to tropical harwood logs; Cocoa exports are 1971-72; Crude oil production and exports are 1971 and 1997 only. Source: World Bank 10 GLOBAL COMMODITY MARKETS CHANGE IN COMMODITY PRODUCTION AND TRADE crude oil. The trade share of production has risen - e.g., for gold, rubber, and soybeans, concentration from one-quarter to one-third over the period, al- fell significantly. For the L4 index, the median concen- though for a number of commodities the shares have tration for production increased from 58.9 to 63.7, declined. For example, coal, rice, and maize are sub- while for exports it increased from 67.3 to 72.9. sistence commodities in many developing countries, In 1970, soybeans exhibited the highest concen- and thus the trade share of production is relatively tration index for both production and exports, as the small, while most of logs are traded in processed US was the largest producer/exporter. This was fol- form. lowed by gold (led by South Africa) and natural rub- ber (led by Malaysia). By 1997, palm oil had the high- Concentration of Production and Exports est concentration index, with Malaysia and Indonesia accounting for the bulk of production and trade - The table below shows concentration indices for followed by soybeans, cocoa and maize. Concentra- production and exports for 1970 and 1997 using two tion indices for nitrogen fertilizer, sugar, coffee and measures: the largest-4 (L4) index (share of the largest aluminum were among the lowest over both periods. 4 producers and exporters); and the Herfindahl- Strikingly, crude oil has the lowest production concen- Hirchman (HH) index (the sum of squares of the shares tration index in 1997 (HH of 4.2 and L4 of 35.6) of all producers and exporters). when OPEC countries are considered as separate pro- Generally, there has been a slight increase in the ducers. If OPEC is considered as a single entity, the concentration of both production and exports over respective producer concentration indices rise to 19.1 the 1970-97 period, but with some notable exceptions and 64.7, respectively. CONCENTRATION INDICES FOR PRODUCTION AND EXPORTS OF 22 MAJOR COMMODITIES (1970 & 1997) Hertindahl-Hirchman Largest4 Production Evorts . Production E,ports 1970 1997 1970 1997 1970 1997 1970 1997 Crude Oil 9.6 4.2 8.8 5.4 54.4 35.6 53.7, 38.1 Coal 10.8 20.5 21.2 15,1 57.0 73.8 78.8 63.7 Rice 18.1 18.5 11.0 14.9 67.6 70.1 B2.1 62Z6 Wheat 12.3 10.1 21.8 16.8 58.3 58.2 85!i 76.6 Maize 17.8 20.9 21.9 411 60.6 70.7 79.1 92.1 Hardwood Logs 5.6 8.8 ias5 19.6 41.5 50.7 81.0 87.7 Soybeans 52.1 28.2 -8,3 39.6 94.8 88.5 99.5 94.2 Cotton 11.6 12.8 8.7 14.1 63.6 64.5 5(k3 691 Aluminum 11.6 9.3 8,5 14.6 59.4 49.9 51,0 502- Sugar 4.4 6.8 11.8 11.1 37.3 45.6 48.8 69.3 Iron Ore 10.5 13.4 10.0 19.5 54.2 64.0 54,9 73.1 Copper 6.8 9.5 .139 14.6 47.9 51.7 67.3 67.2 Bananas 5.4 7.6 10.6 17.8 40.0 46.2 61.1 73.7 Gold 40.1 10.8 n.a. rma, 86.7 57.1 Mae. n.a. Coffee 7.1 9.7 11.5 66 45.3 51.4 5.5 45.9 Nitrogen fertilizer 9.8 10.1 9.0 5.3 52.8 55.8 51.6 39.5 Palm Oil 16.5 34.3 27.5 405 74.6 86.5 88.2 91.4 Natural Rubber 24.2 9.4 30.5 28.4: 80.6 79.8 89.6 a.6 Phosphate fertlizer 9.8 14.3 13.9 24U4 53.2 63.3 -648 69.9 Tea 16.7 16.5 21A 14.3 72.1 70.6 75.5 72.9 Cocoa 14.5 22.3 15.5 28,9 70.6 75.4 71,9 01.5 Potash ferlilizer 18.9 19.3 22.S 20.5 81.6 76.6 84.6 .8 Median 11.6 11.8 --13,9: 16.8 58.9 63.7 67.3 7279 Notes: For aluminum, copper and gold, concentrabons are for 1975 and iron ore 1974. The L4 index assigns equal weight to all four largest producing or exporlng countries, while the HH index assigns disproporbonally higher weights to large producers or exporters. For example, if 4 producers account for 25% each, the L4 index would give a value of 100% [4 x 0.25] while the HH index would give a value of 25% [4 x 0.252]. If the largest producer accounts for 70%, and the rest account for 10% each, the L4 index would stll give a value of 100% [0.7 + 3 x 0.1], while the HH index would give 52% [0.72 + 3 x 0.12]. Source: World Bank. april 2000 11 ECONOMIC OUTLOOK . come East Asian countries, Eastern European coun- Economic O utlook tries eligible for EU accession, Brazil and Mexico. China Wovld gand India, with 46 percent of developing country popu- World GDP growth is expected to average 3.5/% in 2000, and slow to 3.1% in 2001-02. While systemic lation and 55 percent of the poor, are also expected to risks to the global economic environment have sustain fairly rapid growth while grappling with large lessened, downside risks remain. domestic reform agendas. Other middle-income diversified exporters that are more reliant on external savings for their growth (as Economic growth in developing countries con- in Latin America) will also gain, but may be constrained tinues to recover from the financial crisis, underpinned by still-hesitant capital flows. Oil exporters in the Middle by stronger and more broadly based growth in indus- East and elsewhere will experience income gains be- trial countries, and expansion of world trade. Never- cause of higher oil prices, but are expected to show theless, adjustment to the recent financial crisis is far below average output growth, reflecting oil produc- from complete in the developing world, and growth in tion cuts and adjustment to past borrowing and fiscal 2000-02 is projected to remain somewhat below pre- deficits. Non-oil commoditv exporters - mosdy in Sub- crisis trends. Saharan Africa and Central America - will benefit less World GDP growth is projected to average 3.5% than other countries as the recovery in agricultural prices in 2000, but slow to 3.1% in 2001-02, mainly due to is anticipated to be gradual, while their import costs are lower growth in the OECD. Developing countries boosted by high oil prices. growth, on the other hand, is expected to increase from Although systemic risks in the global environment 4.6% in 2000 to 4.8% in 2001-02. have lessened, downside risks remain. These arise from Not all developing countries will participate equally the need to achieve four transitons simultaneously: a in this recoverv. The fastest growth is likely to occur in soft landing in the United States; fiscal stimulus to pri- middle-income countries that experienced substantial vate demand-led growth inJapan; healthier financial and real exchange rate devaluations, that are significant di- corporate sectors in Asia; and adjustment in the oil- versified exporters, and that attract high levels of for- exporting countries. Higher oil prices in the near-term eign direct investment (FDI) inflows, e.g., middle-in- also pose some additional risk. WORLD GROWTH, 1981-2008 (annual percentage change in real GDP) Est Forecasts Region 1981-90 1991-98 1999 2000 2001 2002 2002-08 World total 3.0 2.3 2.9 3.5 3.1 3.1 3.2 High-income countres 3.0 2.2 2.7 3.2 2.7 2.6 2.7 OECD countries 2.9 2.1 2.7 3.1 2.6 2.5 2.6 Non-OECD countries 4.9 5.1 3.7 4.6 4.8 5.1 5.2 Developing countries 3.4 2.8 3.3 4.6 4.8 4.8 4.9 East Asia and the Pacific* 7.7 7.8 6.5 6.6 6.3 6.1 6.2 Europe and Central Asia 3.6 -4.2 1.0 2.5 3.4 3.6 3.9 Latin Amerca and the Caribbean 1.1 3.6 0.0 3.6 3.8 4.4 4.2 Middle East and North Africa 0.5 3.0 2.2 3.5 3.6 3.6 3.7 South Asia 5.8 5.4 5.8 5.9 5.8 5.5 5.5 Sub-Saharan Africa 1.9 2.5 2.5 3.2 3.7 3.8 3.8 Memorandum item East Asian 5 crsis countries*- 7.0 5.0 5.8 5.7 5.4 5.1 5.3 'Includes the Republic of Korea **Indonesia, the Republic of Korea, Malaysia, Philippines, and Thailand. Note: GDP is measured at market prices and expressed in 1987 prices and exchange rates. Growth rates over historic intervals are computed using the least squares method. Source: Global Development Finance, Word Bank, March 2000. 12 GLOBAL COMMODITY MARKETS OCEAN FREIGHT quarter due to strong European demand for coal. Austra- O cean Freight lian coal shipped to Europe rose 33% to $15.16/ton, while Freight rates rise sharply due to robust growth in shipments to China increased 24% to $6.72/ton. economic activity and trade. The Panamax Index (50,000-75,000dwt) rose 28% over the quarter, and was up 72% from a year earlier. Bulk freight rates rose sharply during the first quar- Trans-Pacific round voyage rates were up 36% to ter, reaching their highest levels in nearly five years. The $11,900/ day, on strong grain trade but also supplemented rise was mainly due to accelerating economic growth, from increased coal and ore shipments. Trans-Atlantic but higher bunker fuel prices also contributed to the surge round voyage rates ended the quarter at $10,717/day, up in rates. The Baltic Dry Index (BDI) ended March at 31%. 1660, up 26% from end-1999, and 840/o higher than a The HandyIndex, of smaller size vessels, increased year ago. 23% but is only slightly more than 50% higher than a year The BDI - formerlv the Baltic Freight Index - ago. Rates to Europe slipped back from the surge in the was launched November 1 and is a composite of the fourth quarter, but voyage rates to the Pacific rose sharply Baltic Capesize, Baltic Panamax, and Baltic Handy indi- on the strength of increased trade in coal, ore, forest ces. The Baltic Panamax Index (BPI) is used by Liffe as products and fertilizeers. the price settlement for its Biffex futures contracts. Rates are expected to remain firm because of the A principal reason for the rise in rates the past sev- rapid pace of economic activity and tightness in the sup- eral months has been the revival of shipments to the Far ply of vessels. Biffex futures at end-March stood near East of raw materials to produce steel. Consequently 1700 for April/May (versus the prevailing level of 1660), capesize rates have led the way the past year, but Panamax and at 1600 for October, suggesting not much weakness and Handymax rates have also benefited from increased is expected this year. However, there is a glut of new commodity trade and expanding economic growth in tonnage overhanging the market from the surge in or- Europe. ders of new vessels last year. Longer term rates are ex- The Baltic Capesize Index (80,000dwt+) ended the pected to fall, the extent of which will depend on the quarter 25% higher than end-1999, and 122% higher from strength of demand, the number of ships scrapped, and a vear ago. Atlantic rates posted the largest gains in the first the volume of new vessels entering the market. Baltic Dry Index (1985 = 1000) and Biffex Future 2500 BFI s \ ~~~~Biffex as of end-March 1000 - - - - - - - - - - - - - - - - - - - Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 BPI Time Charter Routes ($/day) BHI Time Charter Routes ($/day) 11000 --------------- - 11000 ---------------- Trans-Atlantic Round Voyage o 8500 -------- -9000 _ ----- 8 - 8t ¢ Continent/Far East 6000 ------------- - 7000 -- _ _____V__ , Trans-Pacific Round Voyage aontinent/Atlantic 3500.I 5000 Apr-98 Oct-98 Apr-99 Oct-99 Apr-98 Oct-98 Apr-99 Oct-99 april 2000 13 _COMMODITIES ENERGY Coal US Monthly Prices ($/ton) Prices into Europe rose on strong demand 42 and supply problems at Colombian and South African ports. These conditions are likely 39 _-_ -_-_-__-_ temporary as the market remains Spot fundamentaljv over-supplied. 36- International coal prices were marginally lower at $25.1 0/ton in the first quarter on continued surplus 33 supply conditions, with prices $10/ton or nearlv 30% lower than levels two years earlier. Prices into Eu- 30 . I ........... , .,,, rope, however, strengthened on strong demand and Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 supply problems out of Colombia and South Africa, World Balance (million tons) which raised prices for these coals, as well as those 4000 from Russia and Poland. These conditions are likely to be temporary, as the market remains fundamen- 3500 ---------------- tally over-supplied. Production Coking coal contract prices between Australian 3000 - - - ___ producers andJapanese steel mills were settled in Feb- Consrion ruary, down 5% or $2.15/ton from last year. This 2500 - _ _-- follows an 18% reduction last winter, with the new benchmark price set at $39.75/ton. 2000 _ _ _ . , _ __...._,___,_I,_ Thermal coal contract prices were settled with 1970 1980 1990 2000 Japancse utilities in MIarch, with producers agreeing to a reduction of 4% or $1.20/ton. The new bench- 600 Exports (million tons) mark of $28.75/ton follows a 13% drop last year. Global coal demand is expected to increase mod- 450- eratelv in the longer term, with most of the growth for power generation. Coking coal demand growth will be limited by technical advances in steel production, 300 _________ ----------------- increasing output from electric arc furnaces, and con- tinuing substitution of non-steel materials in end-use 150 _______________________________-l products. The toughest challenges facing the coal in- dustry are environmental, especially if the Kvoto Pro- o ...' .,........ I ...... tocol becomes a legally binding agreement. 1970 1980 1990 2000 Real coal prices are expected to decline due to US Annual Prices ($/ton) improvements in mine productivity and increasing ex- 80Frecst ports from new low-cost producers, e.g., Colombia, (:Cnstalt l99j)F Indonesia, and Venezuela. Liberalization of electricity 65 -!i _, _ -_,t----_ markets is forcing generators to cut costs and secure a t' greater share of coal supplies on spot markets. 50- -------------------- - - US coal exporters have lost market share be- cause of falling prices and a strong US dollar, and 35 - ----- - cxports arc expected to continue to decline. Growth Current in domestic coal demand for power generation will 2*,0 u- .. .. .I. . result in higher US coal production, with western low- 1970 1980 1990 2000 2010 cost, low-sulfur coal capturing most of the increase. Improving mine productivity is expected to result in a Source: Coal Week International and World Bank continued decline in real US coal prices. 1 6 GLOBAL COMMODITY MARKETS COAL Other Developments * ABARE, in its Outlook 2000, projects that world ther- (quads), gas 89.4 quads, and coal 41.7 quads. Nearly mal coal trade will increase by 4%/year over the next 2/3 of the total energy growth occurs in developing 5 ,ears due to high economic growth and increased countries, accounting for virtually all of the net growth demand for electricity in Asia. World metallurgical in coal consumption. Over this period, combustion coal trade is projected to rise by 1.9%/year, with half of oil contributes 1.5 billion tons of carbon emis- of the growth consisting of pulverized coal injection sions, gas 1.3 billion tons, and coal 1.1 billion tons. coals. Australia's thermal coal exports are projected AME Mineral Economics, in its Export Coal 2000 to grow at a rate of 4.9%, while metallurgical coal Outlook, sites the emergence of China as a major exports are expected to increase at a rate of 2.5%. coal exporter, with exports rising to 71 million tons Production costs of Australian metallurgical and ther- by 2004. Its proximity to Japan, the Republic of mal coal producers have declined significantly in re- Korea, and Taiwan, China, is a major competitive cent years due to mine productivity improvements. advantage. AME also expects that a larger share of * The US DOE, in its International Energy Outlook, the coal export market will be controlled by a smaller projects that over the 1997-2020 period world oil group of large companies that will tend to dampen consumption will increase by 81.7 quadrillion btus excess supply. PRODUCTION (million tons) EXPORTS (million tons) 1995 1996 1997 1998 1995 1996 1997 1998 China 1360.7 1396.7 1372.8 1235.6 Australia 136.4 138.6 146.4 162.3 US 858.6 885.2 910.4 936.0 US 80.3 82.1 76.0 70.5 India 273.4 285.6 297.2 303.1 S. Africa, Rep. 59.7 60.2 63.4 67.1 S. Africa, Rep. 206.2 206.4 220.1 222.8 China 28.6 36.5 30.7 32.3 Australia 191.1 193.4 206.8 219.0 Indonesia 31.3 36.4 41.5 46.9 Russian Fed. 176.9 166.5 159.2 148.6 Canada 34.0 34.4 36.5 34.2 Poland 137.2 137.9 137.8 116.9 Colombia 18.3 24.8 26.5 29.6 Ukraine 83.5 74.1 75.5 73.7 Poland 31.9 28.9 29.5 28.1 Kazakhstan 79.6 73.2 70.2 67.0 Russian Fed. 26.3 25.3 21.2 23.5 Indonesia 41.1 50.2 55.1 59.7 Kazakhstan 12.9 21.7 n.a. n.a. Germany 58.9 53.2 51.2 45.3 Czech Rep. 7.0 6.7 6.6 n.a. UK 54.6 50.2 48.5 41.3 Venezuela 4.3 3.5 4.2 n.a. Canada 38.6 40.0 41.3 38.3 Netherands 2.9 2.4 3.5 n.a. Colombia 25.7 30.1 30.7 33.8 Vietnam 1.8 4.4 4.2 3.5 Korea, D. R. 26.0 24.1 24.1 24.1 Ukraine 2.4 2.0 n.a. n.a. Czech Rep. 17.7 17.5 16.6 16.1 New Zealand 1.3 1.6 1.2 n.a. Vietnam 6.6 11.2 13.1 13.1 Belgium 0.8 1.2 1.5 1.3 Spain 13.7 13.7 13.8 12.5 UK 0.9 1.0 1.1 0.9 Venezuela 4.6 3.5 5.6 6.8 Germany 1.7 1.0 0.5 0.3 World 3705.4 3761.8 3796.3 3655.8 World 464.6 483.9 496.7 519.2 Source: IEA Source: IEA GLOBAL SUMMARY Actual - Annual Growth Rate (%)- World Balance (mil. tons) 1970 1980 1990 1996 1997 1998 1970-80 1980-90 1990-98 Producton 2185 2807 3561 3762 3796 3656 2.8 2.5 0.4 Consumption 2175 2783 3516 3744 3777 3630 2.8 2.6 0.4 Exports 167 263 401 484 497 519 4.7 4.8 2.8 Actual Forecast Price ($Iton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 37.21 36.39 34.38 33.17 33.00 33.50 34.00 35.50 38.00 Constant 1990 32.58 33.58 33.00 32.03 31,09 30.79 30.46 29.70 28.13 Source: IEA and World Bank forecasts. april 2000 17 ENERGY Natural Gas - US Monthly Prices ($/mmbtu) Prices rise on declining inventories and 4.25 concerns about domestic production. Strong demand for storage and end-use consumption 3.50 Spot are expected to keep prices firm this year. Spot . 2.75 ---------E NYMEX Natural gas prices rose 5.6% in the first quarter, Futures despite near-record warm weather, due to a larger-than- 2.00 --------- expected decline in inventories and concerns about a tight market this year. The inventory decline was due to 1.25 ....,,,. .,, I,..... ....... .. I ,,,, .. a combination of lower-than-expected supplies of both Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 domestic and imported gas, and strong demand in non Balance (Tcf) weather-sensitive sectors of the economv Prices are 23 - expected to remain firm the rest of the year due to Censnnihon strong demand for storage and end-use consumption, 21 -_ ------- while supplies remain constrained. a Inventories are estimated to have ended the win- 19- -------- --- - - ter well under 1100 billion cubic feet (bcf), about 25%0 below last year's high level. Consequently, demand 17-r--- for storage injections will be strong over the summer V v Production if pre-winter inventories are to rebuild to last year's I . I , . . I, ... ,,, . .. ., level of 3,000 bcf by end-October. 1970 1980 1990 2000 Gas demand could increase by nearly 4% this year due to continued strong economic grow-th. In- Imports (Tcf) dustrial gas demand - the largest end-use sector for gas consumption - is expected to increase by more 3 than 5%. Gas demand in the power sector is also expected to record strong growth because of the rapid expansion of gas-fired generation capacity, and peak 2- summer requirements for air conditioning. In addi- tion, a fall-off in hydro and nuclear capacity as well as 1 -I------ high oil prices could exert additional pressure on gas demand this year. 0 US natural gas production was flat last year 1970 1980 1990 2000 following a lengthy period of depressed prices, but Annual Prices ($/mmbtu) the industrv is now responding to higher prices 4 through increased investment and drilling. Still, pro- (nnstart {199'> -x duction is expected to grow slowly this year. Im- 3------ - 7 --- ------------ ports from Canada again will rise sharply, helped in part by new pipeline capacity. However, the ability 2-------- ----- --- of producers to fill the new lines will depend on drilling levels and storage. 1- - - - If US demand remains strong, storage levels Current could be well below last year's levels by end-October, resulting in fairly strong prices through this year and 1970 1980 1990 2000 2010 next winter. However, higher prices are expected to result in rising production later this year and next in Source: US DOE, WSJ NYMEX, and World Bank forecasts. both the US and Canada. 18 GLOBAL COMMODITY MARKETS NATURAL GAS Natural Gas - Europe Monthly Prices ($/mmbtu) Continental gas prices rise because of high oil 3.75 prices, creating a large arbitrage with UKgas. Consequently low-priced gas is set to flow to 3.25 - - - - - - - - - - - - - - - - - - - - - - - - - - the continent this summer. European Border 2.75 ---- Imported natural gas prices rose above $3.50 per million btu (mmbtu) because of higher oil prices, 2.25 ----------- as contracted gas brought into Europe is indexed to petroleum prices, but xvith a lag. Relativelv high oil 1.75 . .. i........Ii.l.... , ,,I,I prices should keep imported gas prices firm this year. Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 In the liberalized UK market, spot gas prices Balance (BCM) rose above $2.20/mmbtu in late March, partly due 500 to cooler weather and offshore supplv problems. - However, prices remain well below those on the 400 -- - - - - - continent, and the divergence of prices means that Consumption - - low-priced British gas is set to move into the Euro- 300 ---------- pean mainland this summer. The Interconnector pipe- _ line between the UK and Belgium is in its second 200 - - year of operation, and got off to a slow start last / Production vear because of low prices on the continent. The / pipeline is likelv to be fuli this summer because of 15 1990 2000 1970 198019020 the large arbitrage opportunity, which should sup- port UK prices during the summer months. 800 FSU* Balance (BCM) Gas liberalization is emerging on the continent,nt, as the deadline approaches to implement the EU Gas Product6on - Directive in August. This follows launching of the 6 EU Electricity Directive in February 1999, and height- / Consumption ens competition for gas - the preferred fuel of choice 400 -- ----- - in the poxver sector. European gas demand is projected to increase 200. ---------------- by more than 40 o this year, flloUwing a similar gain in 1999, vith much of the growth forrpoweregenera- 0 '. ''. ie.' ..- ......... tion and expansion into the residential sector. 1970 1980 1990 2000 Europe is well supplied from several internal Annual Prices ($/mmbtu) and external sources, with Russia and Norway add- 8 ing capacity to potentially increase their market share. Constant ( 1990; Petecat The UlK will continue to have surplus capacity in off- 6- - - peak periods for several years, and be able to con- ' tinue to send competitively priced gas to the conti- 4 - - - - - nent. The large arbitrage between the UK and main- 2 _ land Europe is unlikely7 to last for any extended pe- Current riod, as continental gas prices decline - both from an . Current expected decline in oil prices and as market liberal- 0 .. . ~~~~1970 1980 1990 2000 2010 ization advances. Increasing competition and liber- alization are expected to lead to gas-on-gas competi- *Countries of the Former Soviet Union. alization are expecned to lead tices. gas-on-gascompeti-Srce: BP Amoco, World Gas Intelsgence, and World Bank forecasts. tion and a decline in real prices. a pril 2000 19 ENERGY Petroleum Monthly Prices ($/bbl) Prices fall in March as OPEC agrees to raise 30 production. Markets remain tight, however, and without further increases in production 25 - - - - - - - - - - - - - prices could spike later in the year. Spot IPE Brent **e 20 - - - - - - - - - _ _ _ 7 _ _ _ ;Futures _ OPEC agreed to raise production quotas by a defacto 1.7 mb/d beginning April 1, bringing some 15 - - - - - - - _______________ relief to the run-up in prices. Including increases from Mexico and Nonvay, an estimated 1.2 mb/d 10 of "new" producton is expected on the market. Af- Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 ter peaking at $32/bbl in early March, oil prices fell World Balance (mb/d) below $25/bbl at month's end in anticipation of 80 higher output. Despite rising levels of stocks in the second quarter, markets will increasinglv tighten dur- 70 - ing the second half of the year. WVithout further in- creases in production, prices could surge later in the 60 - - - - - - - - year. OPEC met March 27-29 and nine of eleven 50 ----------------------- members agreed to raise output by 7% or 1.45 mb/ Cnnsutn d on April 1. Iran was not a partv to the agreement 40 I ......... I because of its preference for lower production ceil- 1970 1980 1990 2000 ings, but indicated it would maintain its market share. Iraq remains outside the quota system because of 2900 OECD Total Stocks (million bbl) UN sanctions against the country; Including a pro- Endmonth* portional increase for Iran, quotas for the ten OPEC 2750 ------------ -------- countries (excluding Iraq) were increased by 1.72 mb/ d to 24.69 mb/d. All countries had been producing above their 2600 ----------- previous quotas. In March the OPEC Ten produced 24.4 mb/d, whichwas 1.4 mb/d above quota. Saudi 2450 ---------------------- Arabia was the largest over-producer, including its half share of Neutral Zone output. Assuming some 2300 conunued over-production, OPEC is likely to add Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 an additional 1 mb/d in the second quarter. Annual Prices ($/bbl) Given developments over the past several 60 0; oecs months, it is clear that OPEC is targeting a level of Forecast prices above $20/bbl, although there was no for- 45 - - mal declaraton at the OPEC meeting It was re- ported that OPEC will target a band of $22-28/bbl 30 ---- A -$------- for the OPEC basket of crudes. If prices move out 'A of this range for 20 days, the OPEC President can 15 - ¾ authorize a change in production of up to 0.5 mb/ Current d. It was also reported that Saudi Arabia favors a I t somewhat lower range of prices. 1970 1980 1990 2000 2010 Non-OPEC producers, Mexico and Norway; *December 1994 to February 2000. have indicated that thev will increase production by Sorwce: API, BP, Blomberg, IEA, IPE, and World Bank forecasts. 0.15 and 0.1 mb/d, respectively, in continued coop- 20 GLOBAL COMMODITY MARKETS PETROLEUM Petroleum (continued) Crude Oil Production (mb/d) 32 eration with OPEC. Norway's production restraint 32 ()PFC is less clear than Mexico's because its reductions are 24 T --------- - ----- ------ from annual production forecasts. - Other r" In the first quarter, total non-OPEC produc- W Y tion rose 0.40 mb/d. OECD output increased by - - F CPF* 0.25 mb/d, with a 0.17 mb/d gain in Mexico. Else- where, much of the OECD gains were from Nor- 8u wav and Australia. Non-OECD production rose 0.15 mb/d, primarily from Angola, the FSU and 0 ........ China. 1970 1980 1990 2000 OECD petroleum inventories fell by 2.4 mb/ OPEC Crude Oil Production (mb/d) d in the fourth quarter, bringing stocks near the low 24 levels of 1996 (see graphs). For all of 1999, global (hi)er OPEC inventories are estimated to have been reduced by 18 - -, 1.1 mb/d, with OECD stocks down 0.8 mb/d. Pro- / %k jections for the first quarter suggest a further global 12 -- decline of 1.1 mb/d. However, OECD inventories were down onlv 0.23 mb/d in January/February, in 6- part due to mild weather and higher imports. US Saudi Arabia preliminarv data indicates a modest build in MIarch, O .0..,, I, , ...... with crude oil stocks rebounding well ahead of prod- 1970 1980 1990 2000 ucts - again mainly, due to higher imports. OPEC Oil Export Revenues ($ bilion) Oil demand in the first quarter was flat year- 200 on-year due to a 1% decline in the OECD because Other OPEC of mild weather. Much of the reduction occurred O O in Europe (-2.5%Mo) and North America (-0.5/o), which 150 1 t helped ease the rapid drop in inventories. In the non- OECD outside the FSU, demand rose 3.60/o or 0.8 100 ------- ------ mb/d, with most of the growth occurring in Asia. Growth was generally modest in other developing 50…- ------ regions, except for the FSU where apparent con- MNiddle 1;:sr sumption fell 0.4 mb/d. 0 .... , .aI. . In the second quarter, global inventories are pro- 1970 1980 1990 2000 jected to increase by 0.8 mb/d, replacing a good World Oil Demand (mb/d) portion of the draw in the first quarter. This should 48 keep prices well below first quarter highs, but mar- kets remain tight - particularly the US gasoline mar- 36 ket - and price spikes are possible. For 2000, oil demand is projected by the IEA to 24- increase by 2% or 1.5 mb/d, assuming continued strong growth economic growth. Non-OPEC sup- 12- - plies are projected to rise by more than 1 mb/d this - ---------------- FSU year from a number of new developments but also 0 ..' . . . .*. from the effects of higher prices. Increases are ex- 1970 1980 1990 2000 pected in a number of countries, notably Angola, *Former Centrally Planned Economies Australia, Brazil, Canada, Mfexico, Norway and the FSUT. Source: API, BP, IEA, and World Bank. In the absence of higher OPEC production or a p ri l 2000 21 ENERGY Petroleum (continued) Growth in Quarterly Demand (mb/d) 2.00 a collapse in demand, stocks will likely decline in the Asia P32: second half of the year - particularly in the fourth 1.00 …4- quarter - taking global stocks down to extremely low levels. More oil will be required from OPEC to prevent prices from soaring later in the year. 0.00 OPEC plans to hold an extraordinary meeting June 21 to review market developments, but they Other*\\| are unlikely to raise production so soon after the lat- -1.00 A I I est contested increase. Consequently an atypical 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 stockdraw is expected in the third quarter of 0.4 mb/d, which wiH begin to tighten markets once again. 40 OPEC's next formal gathering is September N--E 10, and it is assumed that they wvill increase produc- ton 1.0 mb/d for the fourth quarter to prevent prices from spiking over the xwinter months. Despite this increase, it will be unable to prevent a further reduc- 32 ---------------------------------- tion in annual stocks of 0.3 mb/d (see table). This suggests that prices will remain firm, but there is great 28 - - ---- -------------- uncertainty about the projections of demand, non- OPEC OPEC supplv and, most importantly, inventories. 24 -1 ' - . 1 1 1 1 l~~~~~~~~~~Q94 lQ95 1Q96 1Q97 1Q98 1Q99 lQ00 The market is expected to remain tightly balanced, supporting an average price of $24/bbl. N. America Crude Oil Stocks (mbbl) But clearly the risks are to the upside, especially 450 if OPEC does not take pre-emptive action in Sep- End-Month** tember. Even if OPEC raises production, it brings 425 ----------- many countries to sustainable capacity. Only Saudi Arabia, Kuwait and the UAE would have sizeable 400- [ spare capacity of roughly 3 mb/d should there be an unexpected loss of supply or surge in weather- related demand. As such, Iraq's production could prove critical. ........... Its output has fallen from a high of 2.9 mb/d last fal Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 to 2.3 mb/d in the first quarter, mainlv due to a lack of spare parts and equipment. Production is assumed 750 N. America Product Stocks (mbbl) to gradually rise to 3 mb/d in the fourth quarter, how- ever ongoing disputes with the UN over lifting of End-Month** sanctions continues to leave the continuity of exports I -- - highly uncertain. Should exports cease for any ex- tended period, it may require the rest of OPEC to 650 ---------- maximize capacity. In such an extreme situation, mem- bers may not be able or willing to raise production 600 t-t---- sufficiently fast to prevent a spike in prices. Our long-term forecast of decining real prices 550 ..'.....'. * -. remains unchanged given abundant resources, im- Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 proved technology, demand constraints (e.g., envi- *Excludes countries of the Former Soviet Union ronmental), and increased competition from alter- **Decernber 1994 to February 2000. native sources of supply. 22 GLOBAL COMMODITY MARKETS PETROLEUM OPEC CRUDE OIL PRODUCTION AND QUOTAS (mb/d) NON-OPEC OIL SUPPLY (mb/d) 1Q00- Quotas Quotas Change 1Q98 4Q99 1Q99 Quota 99 Apr-99 Apr-00 1998 1999 4Q99 1Q00 4Q99-1000 Algeria 0.87 0.74 0.76 0.03 0.731 0.788 US 8.37 8.08 8.23 8.15 -0.08 Indonesia 1.31 1.26 1.23 0.04 1.187 1.280 Mexico 3.50 3.35 3.22 3.39 0.17 Iran, Islamic. R. 3.58 3.46 3.46 0.10 3.359 3.623 Canada 2.67 2.56 2.65 2.68 0.03 Iraq 1.58 2.29 2.32 UK 2.84 2.93 3.02 2.99 -0.03 Kuwait* 1.94 1.60 1.63 -0.21 1.836 1.980 Norway 3.14 3.14 3.38 3.45 0.07 Libya 1.46 1.39 1.41 0.18 1.227 1.323 Other OECD 1.36 1.35 1.48 1.57 0.09 Neutral Zone 0.52 0.59 0.60 0.60 Afrca 2.73 2.78 2.88 2.94 0.06 Nigeria 2.26 1.96 1.97 0.09 1.885 2.033 China 3.19 3.19 3.17 3.22 0.05 Qatar 0.71 0.63 0.65 0.06 0.593 0.640 Other Asia 2.19 2.24 2.25 2.21 -0.04 Saudi Arabia* 8.43 7.45 7.52 0.08 7.438 8.023 FSU 7.30 7.49 7.61 7.67 0.06 UAE 2.45 2.03 2.10 0.10 2.000 2.157 Eastern Europe 0.20 0.19 0.19 0.19 0.00 Venezuela 3.36 2.75 2.80 0.08 2.720 2.845 Latin Amerca 3.70 3.78 3.77 3.76 -0.01 Total Crude 28.47 26.14 26.45 1.15 22.976 24.692 Middle East 1.89 1.88 1.90 1.90 0.00 Excluding Iraq 26.89 23.85 24.13 1.15 22.976 24.692 Processing gain 1.64 1.67 1.69 1.74 0.05 NGLs 2.82 2.83 2.83 Total non-OPEC 44.71 44.62 45.44 45.84 0.40 Total OPEC 31.29 28.97 29.28 1.15 22.976 24.692 Note: Includes natural gas liquids (NGLs), unconventional, *Quota includes share of Neutral Zone production. and other supply sources. Source: IEA and OPECNA. Source: IEA WORLD PETROLEUM DEMAND AND SUPPLY (millions of barrels per day) Demand 1996 1997 1998 1Q99 2Q99 3Q99 4Q99 1999 1Q00 2Q00 3Q00 4Q00 2000 OECD 45.9 46.7 46.9 48.8 45.7 46.9 48.9 47.6 48.4 46.7 48.2 50.0 48.3 FSU 4.3 4.3 4.1 4.2 3.6 4.0 4.1 4.0 3.8 3.8 4.0 4.1 3.9 Other 21.4 22.4 22.9 23.3 23.8 23.7 23.8 23.6 24.0 24.7 24.5 24.8 24.5 Total 71.6 73.4 73.9 76.3 73.1 74.6 76.8 75.2 76.2 75.2 76.7 78.9 76.7 Supply OECD 21.7 22.1 21.9 21.5 20.9 21.2 22.0 21.4 22.2 22.0 21.9 22.5 22.2 FSU 7.1 7.2 7.3 7.4 7.4 7.5 7.6 7.5 7.7 7.6 7.7 7.7 7.7 Other* 14.8 15.2 15.5 15.7 15.7 15.8 15.8 15.7 15.9 16.0 16.0 16.0 15.9 OPEC** 28.4 29.9 30.8 30.6 29.1 29.1 29.0 29.4 29.3 30.4 30.7 31.9 30.6 Total 72.0 74.4 75.5 75.2 73.1 73.6 74.4 74.1 75.1 76.0 76.3 78.1 76.4 Stock change OECD 0.0 0.3 0.3 -0.7 0.4 -0.4 -2.4 -0.8 Other/misc.** 0.5 0.7 1.2 -0.3 -0.6 -0.6 0.0 -0.3 Total 0.5 1.0 1.5 -1.0 0.0 -1.0 -2.4 -1.1 -1.1 0.8 -0.4 -0.8 -0.3 *Includes processing gains (1.6 mb/d in 1998 and 1.7 mb/d in 1999). *lncludes NGLs (2.8 mb/d in 1998 and 2.9 mb/d in 1999). **-lncludes floating storage, oil in transit, and miscellaneous to balance. Note: Includes natural gas liquids (NGLs), nonconventional, and other supply sources. Source: IEA data and estmates, and World Bank forecasts. GLOBAL SUMMARY Actual -Annual Growth Rate (%/o)- World Balance (mb/d) 1970 1980 1990 1997 1998 1999 1970-80 1980-90 1990-99 Production 48.5 63.9 66.9 74.4 75.5 74.1 1.82 0.18 1.96 Consumption 46.7 62.7 66.4 73.4 73.9 75.2 2.25 0.20 1.88 Stock Change & Misc. 1.8 1.2 0.5 1.0 1.5 -1.1 Actual Forecast Price ($/bbl) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 20.42 19.17 13.07 18.07 24.00 21.00 19.00 18.00 19.00 Constant 1990 17.88 17.69 12.54 17.38 22.61 19.30 17.02 15.06 14.07 Source: BP and IEA, and World Bank forecasts. a p r i 1 2000 23 AGRICULTURE Cocoa Monthly Prices (p/kg) With the dominant producers registering 200 record output, prices dropped to 85. 7e/kg in ICCO Indicator February, a 3-decade record low. Despite 170 -- recovery in demand, the bearish supply-side fundamentals are expected to keep the 140 - market depressed for the rest of the year LIFFE with some recovery possibly taking place in Futures 2001. 110- 80 ...... . .... .. .... Cocoa prices continued to fall throughout the Mar-97 Mar-98 Mar-99 Mar-00 Mar-Ol first quarter of 2000, with the ICCO daily price World Balance (million tons) indicator reaching yet another record low of 85.2 3.0 ¢/kg in February, a 3-decade record low. A recov- ery in March was short-lived and the quarter aver- 2.5 -------------------------- ------ age bottomed at 90.0o/kg, 5.6% lower than the Production / fourth quarter of 1999 and 35.4%to lower than a 2.0 --------------_ - --__ --__--__-- year ago. The most recent crop update released bv the International Cocoa Organization (ICCO) indicates that world cocoa bean output for the 1999/00 sea- I,. , son (October to September) will reach an estimated 190 2.94 million tons, up 6% from 1998/99. With the exception of Colombia and Nigeria, which will each 2.0 Ending Stocks (million tons) experience a 13% decline, all other major cocoa producers are expected to register substantial gains World in output - C6te d'Ivoire (6%), Ecuador (27%), Ghana (3%), and Indonesia (12%). World grindings are expected to increase by 1.0 f-____________ 3.5%, from 2.76 million tons in 1998/99 to 2.86 million tons in 1999/00. With the exception of 0.5 ---------------- Brazil, which is experiencing a 14% drop in _sC grindings, most countries are expected to increase 0 -r I . . . . . . grindings: C6te d'Ivoire (7%), France (3%), the 1970 1980 1990 2000 Netherlands (1 %), UK (30%o), and the US (5%). Annual Prices (¢/kg) Based on the recent March ICCO update, the 800 cocoa market is expected to register a surplus of Co°nstant (1I990(? Forecast about 80,000 tons during the 1999/00 season. 600 ____ ---------------------- Other forecasts, however, put the surplus at much higher levels: LAvICInternationalZsC'ocoaBulletin(April 400 §--------------- 2000 update) at 236,000 tons, and ED& F Alan /0 January 2000 update) at 102,000 tons. Given these estimates, it is unlikely that the market will turn higher 2 _ any time soon. We thus expect the 2000 cocoa in- Current dicator price to average about 95¢/kg (which is 17 0 1980 19 2 201 , , \ ~~~~1970 1980 1990 2000 2010 ¢/kg lower than our January forecast). Some re- covery is expected to take place in 2000 which mav push prices above 100~~~~~~/kg. Source: 1CCO, LIFFE, and World Bank forecasts. push prices above 100¢/kg. 24 GLOBAL COMMODITY MARKETS BEVERAGES COCOA Other Developments * The drop in world cocoa prices has pushed prices Ledger. This is part of the harmonization policies across received by Ivorian producers to very low levels, which the EU regarding cocoa trading and is back-ed by the in some instances has triggered protests by the farm- Dutch Cocoa Association. Currently, cocoa contracts ers. Furthermore, the role of the New Caistab (the are traded at the London International Financial Fu- reformedcocoaparastatal)isstiliunknownastheIvolian tures and Options Exchange (Liffe) and at the government has reportedly removed its support while ParisBourse. This move follows an earlier decision bv it currently reviews its entire cocoa policy. the EU to harmonize the use of non-cocoa butter in * The new European Cocoa Association (ECA) plans to chocolate production across all EU members. The launch a single cocoa contract, according to The Public decision is expected to be ratified within the year. PRODUCTION AND GRINDINGS TRADE 1996197 1997/98 1998/99 1999/00 1995/96 1996197 1997/98 1998/99 Gross Production (000 tons) Exports (000 tons) CMte d'lvoire 1,108 1,113 1,175 1,250 Cote d'lvoire 1,038 929 964 977 Ghana 323 409 398 410 Ghana 331 267 326 308 Indonesia 325 331 365 410 Indonesia 224 264 148 212 Nigeria 160 165 195 170 Nigeria 147 137 143 142 Brazil 185 170 130 135 Cameroon 93 95 84 91 Cameroon 126 115 125 125 Dominican R. 50 41 54 48 Ecuador 103 35 75 95 PNG 35 28 29 30 Malaysia 100 65 70 80 World 2,116 1,932 1,941 1,990 Dominican R. 52 58 26 47 Imports (000 tons) Colombia 50 45 46 40 US 445 353 427 408 Mexico 45 35 30 35 Netherlands 405 464 320 396 PNG 29 29 30 33 Germany 299 327 309 312 World 2,714 2,675 2,777 2,939 UK 248 176 193 206 Grindings (000 tons) France 117 111 108 112 Netherlands 402 425 415 420 Singapore 88 86 89 88 US 394 399 406 425 Russian Fed. 75 85 75 78 CBte d'lvoire 150 193 225 240 Italy 71 71 72 71 Germany 240 226 197 195 Bel-Lux 45 54 82 60 Brazil 180 188 192 166 Spain 50 49 66 55 UK 172 174 165 170 Estonia 5 65 78 49 France 106 103 123 127 Japan 49 54 43 49 Malaysia 95 100 100 105 Canada 39 34 53 42 World 2,725 2,774 2,764 2,860 World 2,229 2,219 2,218 2,222 Source: ICCO Source: ICCO and World Bank. GLOBAL SUMMARY Actual -Annual Growth Rate (%)o- World Balance (000 tons) 1970/71 1980/81 1990191 1996/97 1997/98 1998/99 1970-80 1980-90 1990-98 Gross Production 1,554 1,695 2,506 2,714 2,675 2,777 0.44 4.69 1.43 Grindings 1,418 1,556 2,335 2,725 2,774 2,764 0.19 4.39 2.72 Exports 1,186 1,126 1,733 1,932 1,941 1,990 -0.52 4.31 1.11 Ending Stocks 497 675 1,791 1,372 1,246 1,231 2.32 14.10 -4.84 Actual Forecast Price (¢Ikg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 145.6 161.9 167.6 113.5 95.0 105.0 120.0 150.0 170.0 Constant 1990 127.7 149.4 160.9 109.6 89.5 96.5 107.5 125.5 125.8 Note: Quanttes refer to cocoa beans. Crop year begins October 1. Source: ICCO and World Bank. a p r i l 2000 25 AGRICULTURE Coffee Monthly Prices (¢/kg) Coffee prices lost ground this quarter with 600 robusta dropping to 102,/kg in March, a 7- Arabica year low. ACPC countries are in the process 450 ---------------------- of initiating a supply retention scheme, FueYBOT although the details remain unclear. 300 - -Futures The arabica indicator price dropped to 222.lc/ R -------a ,- kg in Mlarch, bringing the past quarter's average dowln 150 --------- to 231.7¢/kg, 5.0% lower than last quarter and 2.6% FlFFE Faun_rcy low/er than a year ago. Robusta prices received a harder 0 hit, reaching a 7-year record low of 102.0 ¢/kg in Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 March, pushing the average of the first quarter of World Balance (million bags) 2000 down to 109.0/kg, 21.3% lower than the last 120 quarter of 1999 and 36.9% lower than a vear ago. Production Mlost analysts agree that global coffee output for 100 --- the 1999/00 season will most likely exceed 106 muil- lion bags. According to the USDA, Brazil's output is 80 - -- expected to be 27 million bags while the latest L.NIC international Co/ee Bulletin puts the figure a little loxver at 60 --------------m 24.4 million bags. Colombia appears to have been Fxnorls< affected bv excessive rains, prompting USDA to re- . .,. . .. . . . I. 40 duce its forecast fro(m 12.0 to 10.2 million bags for 1970 1980 1990 2000 this season. Attention now is graduallv shifting to the next crop year. Recent estimates by the Agricultural 1050 Arabica Annual Prces (¢/kg) Trade Office in Sao Paulo has forecasted that Brazil's Forecast production for the 2000/01 season will be 28.1 mil- 800- - - - - - - - - - - - - - lion bags, according to USDA. Global coffee consumption for 1999/00 0 (through the first quarter of 2000) is currently esti- 550 mated to reach 103 million bags, much higher than earlier estmates. But that still leaves the market with 4 300 _1 million bags of surplus. Most of the increase in con- Current sumption took place in the robusta market where the 50 ....I.,,,,,, I......... I I , I I sharp decline in robusta prices gave roasters strong 1970 1980 1990 2000 2010 incenuves to substitute arabica for robusta in blends. Robusta Annual Prices (¢/kg) The stocks picture has also changed consider- 1000 F ablv this season. Total stocks held by producing coun- ("Coilstant (1990) tries declined from 24.1 million bags in 1998/99 to 750 - ( - --- ---- ---_ 20.0 million bags in 1999/00. But total stocks in- creased by an estimated 25% in the last six months, 500- a- - - with most of this increase in coffee consuming coun- tnes. Forexample,US stocks reached3.1 millionbags 250- at the beginning of the year, the first time to exceed Urrent the 3 million bag mark since July of 1995. Current . . ... Given the estimated surplus of 4 million bags, 1970 1980 1990 2000 2010 we expect arabica prices to average a little over 220c/ kg and robusta prices to be around I l0¢/kg this year, Sourre: ICO, USDA, LIFFE, CSCE, and World Bank forecasts. with a small recovery in both markets in 2001. 26 GLOBAL COMMODITY MARKETS BEVERAGES COFFEE Other Developments * Following fears of further deterioration in the coffee as 6 rnillion bags. market, the Association of Coffee Producing Coun- * A number of Vietnamese coffee traders may default tries (ACPC) iniiiated a supply retention program, in on their contracts due to prolonged supply delays be- the range of 6 to 7 million bags. Brazil and Colombia cause of attempts to renegotiate contracts, according are major supporters of the program, which has also to The Public Ledger. A number of traders had signed found support with non-ACPC countries. WVhile the forward contracts at 150¢/kg, while robusta has re- details of the program have not been made public, cently traded as low as 100l /kg. Vietnam is the world's analysts believe that producers may withhold as much top robusta producer and exporter. PRODUCTION (000 bags) STOCKS AND CONSUMPTION 1996/97 1997/98 1998/99 1999/00 1996/97 1997/98 1998/99 1999/00 BrazilA 27,663 22,756 34,547 27,000 Ending Stocks in Producing Countries (000 bags) Colombia 10,876 12,211 11,500 10,800 Brazil 14,128 11,278 12,075 7,362 Vietnam* 5,705 6,893 6,200 7,500 Colombia 4,420 3,929 2,669 2,447 Indonesia*A 8,296 7,756 7,589 7,200 Cote d'lvoire 2,915 1,885 1,693 1,517 C6te d'lvoire* 4,528 3,682 2,742 5,300 Costa Rica 1,212 1,212 1,052 1,122 Mexico 5,324 5,116 4,400 5,200 Ethiopia 660 360 1,077 1,102 Guatemala 4,524 4,218 3,400 4,900 Congo, D. R. 219 292 492 694 India 3,469 4,718 3,833 4,700 Kenya 367 423 336 648 Uganda* 4,297 3,032 3,600 4,000 Thailand 62 187 431 503 Ethiopia 3,270 2,916 3,867 3,500 Cameroon 115 117 450 498 Honduras 2,004 2,564 2,300 2,776 World 29,185 24,500 24,083 20,039 Costa Rica 2,126 2,489 2,376 2,550 Consumption (000 bags) El Salvador 2,534 2,157 1,840 2,221 US 17,847 18,194 18,290 18,110 PeruA 1,802 1,916 2,066 2,150 Brazil 10,880 10,880 12,500 12,800 EcuadorA 1,993 1,191 1,260 1,800 Germany 9,709 9,038 9,300 9,349 Thailand* 1,403 1,293 993 1,370 Japan 6,369 5,900 5,710 5,993 Kenya 1,246 882 1,133 1,330 France 5,623 5,317 5,300 5,413 Cameroon* 1,432 889 1,333 1,300 Italy 4,857 4,843 4,700 4,800 Venezuela 1,200 975 1,400 1,250 Spain 3,029 2,968 2,999 2,999 PNGA 1,089 1,076 1,340 1,250 Canada 2,960 2,920 2,291 2,724 Nicaragua 793 1,086 1,044 1,100 UK 2,296 2,565 2,419 2,427 World 102,411 96,438 105,140 106,515 World 99,500 99,400 98,000 98,967 Source: ICO and USDA. Source: ICO, World Bank and USDA. GLOBAL SUMMARY Actual -Est.- -Annual Growth Rate (%O) - World Balance (000 bags) 1970/71 1980/81 1990/91 1997/98 1998/99 1999/00 1970-80 1980-90 1990-98 Production 64,161 86,174 88,749 96,438 105,140 106,515 2.03 1.62 0.17 Consumption 71,536 79,100 96,300 99,400 98,000 98,967 1.01 1.97 0.22 Exports 54,186 60,995 76,163 77,538 83,891 84,979 0.71 2.63 0.17 Ending Stocks 53,661 30,979 45,096 24,500 24,083 20,039 -5.49 3.75 -6.49 Actual Forecast Arabica Prices (¢/kg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 269.4 416.8 297.6 229.1 220.5 220.5 234.8 254.0 265.0 Constant 1990 236.4 384.6 285.7 221.2 207.7 202.6 210.3 212.5 196.2 Robusta Prices (¢/kg) Current 180.6 173.6 181.9 148.9 110.2 114.6 125.7 163.1 187.4 -Constant 1990 158.4 160.2 174.6 143.8 103.8 105.4 112.6 136.5 138.7 *Entirely or predominantly robusta producer. ACrop year begins Aprl 1 (Otherwise October 1). One bag equals 60 kg. Source: ICCO, USDA, and World Bank. april 2000 27 AGRICULTURE Tea Monthly Prices (¢/kg) The 3-auction price average dropped 7.3% 260 during the first quarter. Calcutta auction prices 3-Auction Average reached a low of 136.2)/kg in March while 230 --------- - ----- Mombassa posted moderate gains to end the quarter at 206.2)/kg Globalproduction 200 -------- - --------- prospects for 2000 look healthy despite unfavorable weather in Kenya. 170 >v / While Calcutta auction prices declined bv 140 .. l I........... ,,I Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 27.0% this quarter, Mombassa auction prices posted a 7.3% increase; Colombo auctions remained largely World Balance (million tons) unchanged (-0.6%). The 3-auction price averaged 3.5 7.8% lower this quarter. Global tea output for 1999 is expected to 2.8 _-_-_-_-- reach 2.85 million tons, down from 2.96 million Production tons in 1998 with India and Kenya are experiencing 2.0 _ ------------------ 7.4/o and 1 5.4o declines, respectively. On the con- sumption side, India, the world's dominant black 1.3 tea consumer, absorbed about 650 thousand tons, virtually unchanged from 1998 consumption levels. ------ The UK, the leading tea importer until 1998, was 1970 1980 1990 2000 overtaken bv the Russian Federation which last vear imported 141 thousand tons. Despite domestic eco- 100 UK Ending Stocks (thousand tons) nomic problems and a high tariff for packet teas, Warehouses Russian tea imports did not decline as originally 75 ----rehouses anticipated, mainly because Russian importers switched to bulk (and in some cases lower quality) tea. 50 ---------- Despite the recent unfavorable weather in Kenya which caused the Mombassa auction deliv- 25 . - eries to decline from 100 thousand lots in January whokesalctc r to 55 thousand lots in April, production during the 0 first quarter totaled 53.9 thousand tons, compared 1970 1980 1990 2000 to 50.3 thousand tons in the first quarter of 1999. Annual Prices (¢/kg) Mombassa auction volumes were also bolstered bv 450 good offerings from Tanzania and Malawi. India Forecast and Sri Lanka have posted large outputs for the 350 ____---- ------- first quarter raising the prospects of a recovery to a promising crop year. 250 - - - ------------ On the supply side, we expect a strong re- k' covery in production. On the demand side, we 150 _ --- expect Russia and Middle-East tea consumers to Current increase imports of better quality tea, especially fol- LA I , . I I lowing increased export earnings due to higher 1970 1980 1990 2000 2010 crude oil prices. Putting these two factors together, we thus forecast tea prices for the year 2000 to av- Source: ITC, FAQ, and World Bank forecasts. erage 1 86¢/kg, a little above the 1999 average. 28 GLOBAL COMMODITY MARKETS BEVERAGES TEA Other Developments * The Tea Board of India is studying a feasibility report ment by which India will provide a quota of 15 thou- submitted in February exploring futures trading for sand tons of Sri Lankan tea per vear at a 500% reduc- tea using 11 benchmark grades. The proposed loca- non from the prevailing import duty. tions of the exchanges are in the South and East * In February, Tata Tea Ltd., the world's largest inte- (Calcutta or Guwahti). Although the government is grated tea company, acquired the British company keen on the initiative, the Indian Tea industry is sharply Tetlev Ltd., which owns the second-largest tea brand divided. for $434 million, according to the Asian Wdall Street * India and Sri Lanka finalized a bilateral free trade agree- Journal. PRODUCTION AND AUCTION VOLUMES TRADE 1996 1997 1998 1999 1996 1997 1998 1999 Production (000 tons) Exports (000 tons) India 780 811 870 806 Sri Lanka 234 258 265 264 China 593 613 665 660 Kenya 244 198 263 242 Sri Lanka 259 277 281 284 China 170 202 217 200 Kenya 257 221 294 249 India 160 201 203 176 Turkey 115 140 178 170 Indonesia 102 67 67 75 Indonesia 166 154 166 165 Argentina 41 56 59 59 Japan 89 91 82 85 Malawi 37 49 41 35 Iran, Islam. R. 58 60 60 63 Uganda 15 18 23 22 Argentna 43 55 50 54 Tanzania 18 19 22 21 Bangladesh 53 54 56 47 Bangladesh 26 25 22 20 Vietnam 40 42 42 45 World 1,113 1,178 1,265 1,200 Malawi 38 44 40 39 Net Imports (000 tons) Uganda 17 21 26 25 Russian Fed. 111 148 141 141 Tanzania 19 22 24 23 UK 148 151 146 137 Taiwan, China 23 24 23 22 Pakistan 111 87 112 108 Zimbabwe 17 17 18 18 US 89 81 97 93 World 2,639 2,724 2,963 2,850 Egypt 65 78 66 65 Major Auction Volumes (000 tons) Japan 49 52 45 49 Colombo 230 255 229 262 Iraq 2 17 42 35 Mombasa 190 167 207 215 Morroco 28 35 41 35 Calcutta 85 87 79 87 Iran, Islam. R. 31 36 34 27 Chittagong 46 43 43 40 Poland 30 31 29 31 Jakarta 13 30 35 24 Afganistan 48 35 26 22 All Auctions 941 969 987 1,014 World 1,141 1,188 1,216 1,235 Source: FAO, ITC, and World Bank. Source: FAO, ITC, and World Bank. GLOBAL SUMMARY Actual -Est.- - Annual Growth Rate (%)- World Balance (000 tons) 1970 1980 1990 1997 1998 1999 1970-80 1980-90 1990-98 Production 1,287 1,894 2,526 2,724 2,963 2,850 4.07 2.88 0.90 Net Imports 640 859 1,099 1,188 1,216 1,235 2.57 2.33 1.26 Yields (tons/hectare) 0.77 0.80 1.12 1.22 1.31 1.31 0.34 4.12 0.19 Actual --Forecast Price (c/kg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 166.1 206.0 204.6 183.9 186.0 187.0 188.5 195.0 210.0 Constant 1990 145.4 190.1 196.4 177.6 175.2 171.9 168.9 163.2 155.5 Source: ITC, FAO, and World Bank. april 2000 29 AGRICULTURE Fats and Oils Monthly Prices ($/ton) The World Bank's oils index declined 7.6% in 770 the first quarter. With ample supplies of palm, rapeseed, and coconut oil, it will be 670 ------------- ----------- some time before the downward pressure is Weighted Price taken off the market. 570 ------ The World Bank's weighted oil price index av- eraged $387.05/ton during the first quarter of 2000, 470 ___ ---- ------ t 7.6% lower than the last quarter of 1999 and 31.2% 0 lower than a year ago. Both soybean and palm oil, the 370 index's major components, experienced substantial Mar-96 Mar-97 Mar-98 Mar-99 Mar-0O price declines. World Balance (million tons) Xtorld output of the major fats and oils for the 120 1999/00 season (October to Scptember) is currentlyv estimated at about 112 million tons, almost 5% higher 90 _- _ -_ than last season's crop. NMost of this growth is ex- Production pected to be accounted for bv rapeseed oil (15.30%6), 60 _ _-_- - palm oil (8.5%), sunflowerseed oil (3.26%) and soy- bean oil (2.28%). Marked declines in production are expected to take place in groundnut oil (-4.4%), olive 3 _ _ oil (-9.9%), sesame oil (-7.1%). ,xports Malaysia continues to be by far the largest oil 1970 1980 1990 2000 exporter, currentlv accounting for almost 30% of the world market followed by Argentina (140%o), Indone- Ending Stocks (million tons) sia (12%), the US (9%), the EU (8%), Brazil (4%), and .World Canada (3%). Malaysia and Indonesia account for the / bulk of palm oil exports while the US, Argentina, and 11.5 Brazil account for the majority of soybean oil exports, while Canada exports mainly rapeseed oil. On the 8.0 - -- - _ import side, India and the EU lead the way with a 14% share each, followed by China (8%), US (5%), 4.5 --------- - -- ------ Pakistan (40%o), and Iran (30%o). The strcture of irn- U t;S and Eli ports has changed lately, with India emerging as the 1.0 dominant importer, after occupying the third posi- 1970 1980 1990 2000 tion just two seasons ago. China, which in 1996/97 Annual Prices ($/ton) used to be the dominant importer, has switched from 2000 oil imports to seed imports, a trend likely to be fol- constant (199( Forecast lowed by others as importers attempt not only to cir- 1800 - - 5- - - - - - - - - - - - - - - - - - - - - - - - - _ cumvent import trade restrictions but also add some domestic value added into the final product. 1000 - - - - - - - - - - - - - - - - - - - - - The 1999/00 season is going to reach a record V level again with the 10 most important oils increasing 500 by 4.7% (according to the USDA March update). Production of the 17 most important oils are expected C ......nt I,, ....,,. to increase by 4.90 % (according to Oil Worla5. We cx- 1970 1980 1990 2000 2010 pect the Wtrld Bank's oil price index to average $410/ ton for the year 2000 and remain unchanged for 2001. Source Oil World, Hamburg, Germanv and World Bank forecasts. Substantial recoverv is expected in 2002. 30 GLOBAL COMMODITY MARKETS FATS, OILS, AND OILSEEDS FATS AND OILS EXPORTS OF MAJOR FATS & OILS (milion tons) IMPORTS OF MAJOR FATS & OILS (million tons) 1996197 1997/98 1998/99 1999/00 1996/97 1997/98 1998/99 1999/00 Malaysia 8.45 8.58 9.31 10.50 India 1.98 2.18 4.46 4.81 Argentina 3.95 3.95 5.16 4.96 EU 4.35 4.53 4.38 4.73 Indonesia 3.49 3.28 4.03 4.32 China 4.56 4.10 3.02 2.82 US 3.10 4.05 3.54 3.10 US 1.68 1.82 1.58 1.80 EU 2.73 2.96 2.83 2.75 Pakistan 1.32 1.53 1.58 1.50 Brazil 1.38 1.29 1.54 1.57 Iran, Islamic R. 0.79 1.05 1.21 1.17 Canada 0.93 0.99 1.07 1.01 Mexico 0.86 0.92 0.94 0.93 Philippines 0.96 1.40 0.48 0.87 Turkey 0.86 0.90 0.71 0.88 World 31.90 33.08 33.79 35.17 World 31.34 33.23 33.68 34.96 Source: Oil World, Hamburg Germany Source: Oil World, Hamburg Germany PRODUCTION, EXPORTS, AND STOCKS OF MAJOR FATS AND OILS - Production (million tons) - -Exports (million tons) - - Ending Stocks (million tons)- Fats and Oils 1997/98 1998/99 1999/00 1997/98 1998/99 1999/00 1997/98 1998/99 1999/00 Soybean 23.16 24.57 25.13 7.61 7.74 7.14 2.42 2.54 2.84 Palm 17.02 19.30 20.93 11.63 13.09 14.51 2.54 3.22 3.52 Rapeseed 12.20 12.48 14.39 2.10 1.86 1.80 1.18 1.24 1.35 Sunflower 8.57 9.21 9.51 2.99 3.04 3.00 0.91 0.92 0.96 Tallow 7.69 8.06 8.13 2.22 2.36 2.24 0.59 0.52 0.55 Lard 6.36 6.60 6.67 0.16 0.19 0.18 0.43 0.39 0.43 Butter 5.73 5.82 5.90 0.59 0.58 0.61 0.67 0.69 0.72 Groundnut 4.43 4.77 4.56 0.26 0.24 0.29 0.41 0.43 0.40 Cotton 4.09 3.83 3.91 0.23 0.16 0.19 0.31 0.28 0.30 Coconut 3.45 2.41 3.08 2.13 1.04 1.64 0.60 0.31 0.43 Palm Kernel 2.19 2.42 2.62 1.06 1.23 1.24 0.30 0.24 0.30 Olive 2.62 2.52 2.27 0.47 0.58 0.51 0.14 0.16 0.16 Corn 1.93 1.97 2.05 0.77 0.71 0.72 1.05 1.16 0.96 Fish 0.80 1.13 1.27 0.46 0.61 0.70 0.15 0.19 0.25 Linseed 0.68 0.73 0.74 0.12 0.12 0.15 0.09 0.11 0.11 Sesame 0.73 0.70 0.65 0.02 0.02 0.02 0.05 0.04 0.04 Castor 0.44 0.44 0.43 0.26 0.21 0.23 0.06 0.07 0.05 Total 102.09 106.94 112.24 33.08 33.79 35.17 11.88 12.51 13.36 Source: Oil World, Hamburg, Germany GLOBAL SUMMARY Actual -Est.- -Annual Growth Rate (%o) - World Balance (mil. tons) 1970171 1980181 1990/91 1997/98 1998/99 1999/00 1970-80 1980-90 1990-98 Production 39.78 58.09 80.84 102.09 106.94 112.24 3.66 3.61 3.43 Consumption 39.82 56.80 80.77 102.40 106.19 111.18 3.53 3.75 3.38 Exports 8.83 17.76 26.89 33.08 33.79 35.17 7.01 4.34 2.83 Ending Stocks 5.18 9.25 12.15 11.88 12.51 13.36 6.97 2.83 -0.84 Actual Forecast Price ($1ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 569.7 574.0 658.6 473.2 410.3 410.3 424.5 466.6 511.5 Constant 1990 498.9 529.6 632.1 456.9 386.5 377.1 380.3 390.4 378.6 Note: Crop year begins October 1. The price is trade weighted average of soybean, palm, coconut, and groundnut oils. Source: Oil World, Hamburg, Genmany, and Wodd Bank. april 2000 31 AGRICULTURE C o co nut O il Monthly Prices ($/ton) With healthy production prospects for both 900 coconut and palm kernel oil, prices declined c.i.f. Rotterdam throughout the first quarter of 2000, reaching 800- --------- - ----- $552/ton and $556/ton, respectively in March. The bearish sentiment is likely to persist for 700---- the rest of calendar 2000. Coconut oil prices averaged $599/ton during 600 ---------- ------ the first quarter of 2000, 14.3% lower than the fourth quarter average of 1999 and 18.6% lower than a 500 ,.... I ,, . year ago. Prices of palm kernel oil, a close substitute Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 to coconut oil, averaged $588.0/ton in the first quar- World Balance (million tons) ter of 2000, 14.3% lower than the last quarter of 3.5 1999 and 16.6% lower than a vear ago. In 1999/00, Production coconut and palm kernel oils wil account for 2.74% 2.8- and 2.33(%/o of world production of the 17 major fats and oils, respectively. About half of the global 2.0 --Y- - - production of both oils is internationally traded. While global coconut oil output for the 1999/ 00 season (October to September) will recover from . 7 s wL the lagged El Niflo effects, latest forecasts place it at about 3.08 million tons, almost 10% lower than 1970 1980 1990 2000 1997/98. Oil lY'orli's estimate of global output is currently 3.08 million tons. USDA also loNvered its Ending Stocks (million tons) forecast from its December update, which placed it World at the much higher level of 3.36 miflion tons. Ex- ports are expected to reach 1.63 million tons, with 0.6 - _----------- - - the EU and the US expected to account for 36%).o and 31')o of global imports. Palm kernel oil will 0.4 pick up with world production exceeding 2.6 mil- lion tons 1999/00, up from 2.42 million tons last 0.2 - ____________________________ season. Trade is expected to top 1.20 million tons tit o7° t' " > wvith the E-U and the US accounting for imports of 0 494,000 and 205,000 tons, respectively. 1970 1980 1990 2000 The Philippines, the world's dominant coco- Annual Prices ($/ton) nut oil producer, is anticipated to reach 1.18 million 2500 tols, followed by Indonesia and India with 714,000 , (IoIsaR; f)9( Forecast 00~~~~~0 and 407,000 tons, respectively. Production of palm 1900 ------ kernel oil will reach 1.42 million tons in Malavsia, followed bv 650,000 tons in Indonesia. _ -0-t---f3t With coconut oil production approaching its 1 0 t0 pre-E.l Nifio levels and palm kernel oil production 700 also posting a healthy increase, the market outlook 700 -___ for the rest of the calendar 2000 is bearish. %Vc Current thus anticipate coconut oil prices to average about 10 0 , 2 2010 $650/kg in the year 2000, more than 10% lower than 1999, a further price decline is aniticipated in Source: Oil World Hamburg, Germanv and)World Bank forecasts. 2001. 32 GLOBAL COMMODITY MARKETS FATS, OILS, AND OILSEEDS COCONUT OIL Other Developments * During the 1 970s, the government of Philippines intro- coconut products. According to LMC Ilternational, the duced a levw on exports of coconut products. Produc- fund is currendy worth $2.5 billion and there appears to ers paid the levy and received a stock certificate entitling be consensus in the industry that the fund should be used them to shares of the proceeds of the find. The objec- to improve the competitiveness of the Filipino coconut eve of the fund was to stabilize the prices of domestic sector. COCONUT OIL PALM KERNEL OIL 1996/97 1997/98 1998/99 1999/00 1996/97 1997/98 1998/99 1999/00 Production (000 tons) Production (000 tons) Philippines 1,257 1,628 780 1,183 Malaysia 1,157 1,127 1,251 1,420 Indonesia 756 652 458 714 Indonesia 506 543 628 650 India 419 439 435 407 Nigera 181 180 188 188 Mexico 134 128 123 125 Colombia 33 34 39 41 Vietnam 57 69 74 77 Thailand 36 34 37 40 World 3,151 3,449 2,414 3,075 World 2,167 2,191 2,419 2,622 Ending Stocks (000 tons) Ending Stocks (000 tons) Philippines 87 32 56 80 Malaysia 144 149 105 135 US 68 178 69 78 Indonesia 40 50 43 60 Indonesia 35 40 40 60 US 23 29 34 37 India 31 32 34 27 EU 15 23 24 27 World 382 598 314 430 World 263 297 235 299 Exports (000 tons) Exports (000 tons) Philippines 950 1,386 463 834 Malaysia 483 476 551 600 Indonesia 603 511 348 555 Indonesia 435 459 563 525 World 1,753 2,125 1,039 1,635 World 1,036 1,058 1,232 1,243 Imports (000 tons) Imports (000 tons) EU 639 756 534 596 EU 427 419 472 494 US 539 653 359 504 US 178 163 181 205 China 42 34 53 56 Japan 54 53 50 53 Korea, Rep. 44 40 42 42 Brazil 51 39 28 36 World 1,695 2,087 1,163 1,631 World 1,055 1,064 1,194 1,278 Source: Oil World, Hamburg, Germany Source: Oil World, Hamburg, Germany GLOBAL SUMMARY Actual -Est - Annual Growth Rate (%o)- Coconut Oil (000 tons) 1970/71 1980/81 1990/91 1997/98 1998/99 1999/00 1970-80 1980-90 1990-98 Production 2,020 2,842 3,377 3,449 2,414 3,075 2.36 0.74 0.08 Consumption 2,021 2,688 3,169 3,195 2,822 2,995 2.24 0.72 0.25 Exports 608 1,215 1,701 2,125 1,039 1,635 6.80 1.29 1.26 Ending Stocks 292 509 641 598 314 430 3.22 3.89 -5.59 Palm Kernel Oil (000 tons) Production 378 570 1,449 2,191 2,419 2,622 2.80 11.20 5.77 Consumpton 387 528 1,375 2,163 2,443 2,593 2.62 11.38 5.80 Exports 160 402 907 1,058 1,232 1,243 7.24 9.35 1.76 Ending Stocks 45 134 256 297 235 299 6.26 9.60 0.23 Actual Forecast Coconut Oil Prices ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 751.6 656.8 657.9 738.0 650.0 625.0 620.0 620.0 650.0 Constant 1990 659.3 606.1 631.5 712.6 612.3 574.4 555.4 518.8 481.2 Note: Crop year begins October 1. Source: Oil World, Hamburg, Germany and Word Bank. a p ri 2000 33 AGRICULTURE Palm Oil Monthly Prices ($/ton) Global palm oil production will exceed 20 750 million tons this season and a bearish c.i.f. N. Europe sentiment is expected to remain for the rest 625 t of the year. China mayphase out its palm oil quota system in view of its bid to become a 500 - - -- _ - U77TO member. Malaysia and Indonesia are considering eliminating their export taxes. KLCE 375 ---------------- Futures Palm oil priccs declincd to $343.3/ton in the 0..... first quarter, 6.8?%o lower than the fourth quarter of 250 ..I, . I .I... ................. , I 2000 average and 39.1% lower than a year ago. Palm Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 oil, a close substitute to soybean oil, is expected to World Balance (million tons) account for 18.7% of global production and 41.3% 24 of global trade of the most inmportant oils. Almost 70%Mo of global production is internationally traded, 18 _--- ------------------------- making it the most highly traded oil. Production The 1999/00 season (October to September) 12 -_-_-_-_---- will be another record for palm oil production and output will reach 20.93 million tons (according to Oi 6 Wor/d) or 20.99 million tons (according to the LUSDNAs March update of Olseeds: World Alarkets and Trade). o ==0_,,_, ............. , Malaysia and Indonesia, the world's top producers, 1970 1980 1990 2000 will increase their crop by 10% and 6% respectively, and are expected to account for about 82'Y/o of global Ending Stocks (million tons) production. In the first quarter of 2000, Malavsia's output reached 2.23 million tons, up from 1.77 mil- 3 lion tons in the first quarter of 1999. World end-of- season stocks wvill exceed 2.5 million tons, with Ma- laysia expected to hold 1.15 million tons. 2 - Global exports xxill also set another record, es- timated at 13.4million tons (accordingto USDA's fig- 1- -- - ------ ures) and 14.5 million tons (according to Oil World7 figures.) Two-thirds of exports will come from Ma- 0 - J>l . ........... lavsia. India, xvhich in the last two seasons has emerged 1970 1980 1990 2000 as the dominant palm oil importer, is expected to ac- Annual Prices ($/ton) count for almost 23% of imports ahead of the EU 1700 (16 .2/(o), China (l0.2%/o), and Pakistan (7.7%). Almost CoDisrnt an t> Forecast 40(%/o of imports will go to India and the EU, which 1300 - - i_ are expected to be 1900 and 13% higher than last sea- son. India, however, may reduce its imports, if the 900 -L proposed import dury increase comes into effect- - B currently standing at 27.5%0 . 500 ---- - -t- Based on the latest global production estimates urrent of palm oi, as well as other competing ois, the mar- 100 .I ...... h,, ......,,elil.,. ket outlook is expected to remain bearish. In particu- 1970 1980 1990 2000 2010 lar, during 2000 the price will average around $350/ ton and remain at that level throughout the year 2001. Source: Oil World, Hamburg Germany and World Bank. Recovery is expected to take place in 2002. 34 GLOBAL COMMODITY MARKETS FATS, OILS, AND OILSEEDS PALM OIL Other Developments * China and Malaysia are discussing the gradual phase the current level of $36.80/ton while Indonesia is con- out of the palm oil import quota regime, within a time sidering reducing it to 3%, from 10%. frame of six Xears. The discussions are part of China's * India's Central Organization for Oil Industry and Trade bilateral talks w7ith manv of its trading partners, fol- has asked the government to further raise custom du- 1owing its bid to become a member of the World ies on vegetables oils, including palm oil, on top of the Tradc Organization (\T0). increase from 16.5% to 27.5% that went into effect * Nalaysia and Indonesia are considering cutting export earlier this year. If any further increase takes place, taxes on crude palm oil in order to further boost ex- Malaysian palm refineries may move to India, accord- ports. \lala-sia is considering scraping the tax, from ing to The Public Ledges: PRODUCTION AND CONSUMPTION TRADE AND ENDING STOCKS 1996/97 1997/98 1998/99 1999/00 1996/97 1997/98 1998/99 1999/00 Production (000 tons) Exports (000 tons) Malaysia 9,000 8,509 9,759 10,805 Malaysia 7,794 7,847 8,482 9,634 Indonesia 5,078 5,086 5,965 6,340 Indonesia 2,419 2,301 3,118 3,235 Nigeria 678 688 713 735 Singapore 286 253 270 270 Colombia 440 439 465 511 PNG 281 228 250 267 Thailand 386 363 397 430 World 11,875 11,630 13,086 14,514 Cote d'lvoire 250 276 281 288 Imports (000 tons) PNG 276 232 259 277 India 1,395 1,684 2,754 3,280 Ecuador 201 202 213 238 EU 1,957 2,022 2,041 2,300 World 17,487 17,018 19,302 20,932 China 1,851 1,490 1,433 1,450 Consumption (000 tons) Pakistan 1,020 1,210 1,053 1,095 India 1,275 1,797 2,577 3,310 Egypt 374 384 453 500 Indonesia 2,699 2,797 2,876 2,920 Singapore 402 351 450 429 EU 1,897 1,945 1,970 2,210 Japan 382 355 361 368 China 1,663 1,545 1,476 1,405 Myanmar 290 241 253 300 Malaysia 1,217 1,088 1,099 1,318 World 11,729 11,866 12,692 14,231 Pakistan 1,087 1,175 1,048 1,095 Ending Stocks (000 tons) Nigeria 728 775 768 823 Malaysia 907 719 1,208 1,150 Egypt 367 381 409 423 Indonesia 605 625 600 800 Colombia 384 384 372 401 India 285 180 360 350 Thailand 387 357 354 378 China 280 175 130 170 World 17,090 17,756 18,234 20,344 World 3,009 2,543 3,216 3,521 Source: Oil World, Hamburg Germany Source: Oil World, Hamburg Germany GLOBAL SUMMARY Actual -Est- -Annual Growth Rate (%1o)- World Balance (000 tons) 1970171 1980181 1990/91 1997/98 1998/99 1999/00 1970-80 1980-90 1990-98 Production 1,742 4,587 10,976 17,018 19,302 20,932 9.82 9.41 7.15 Consumption 1,685 4,822 11,041 17,756 18,234 20,344 9.66 9.76 6.88 Exports 920 3,793 8,639 11,630 13,086 14,514 12.24 9.31 5.24 Ending Stocks 247 992 2,551 2,543 3,216 3,521 16.21 9.41 1.34 Yields 2.50 2.91 3.19 3.23 2.98 3.36 3.93 0.92 -0.27 Actual Forecast Prices ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 530.9 545.8 671.1 436.0 350.0 350.0 365.0 425.0 460.0 Constant 1990 465.8 503.6 644.1 421.0 329.7 321.7 327.0 355.6 340.5 Note: Crop year begins October 1. Source: Oil World Hamburg, Germany and World Bank. a p ri l 2000 35 AGRICULTURE Soybean Oil Monthly Prices ($/ton) Prices slipped further reaching $357/ton in 700 February bringing the first quarter average more than 26% belowprices from a year ago. 600 ----------------- India's oil industry representatives asked for another increase in import duties for both oils. So. t. CBO CBOT Soybean oil prices averaged $363.3/ton during Futures the first quarter of 2000, down 5.4% from the fourth 400 - --- quarter of 1999 and 26.2% lower than a year ago. Soybean oil, a close substitute to palm oil, accounts 300 I. . for 22 of global fats & oils production, with 23.o Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 being traded internationally. World Balance (million tons) This season's output (1 999/00, October to Sep- 26 tember) is expected to be between 24.18 million tons (USDAs March update) and 25.13 nillion tons (ac- 20 - cording to the latest Oil Worldestimate), implying little Production or no growth from the 1998/99 season. Increased 13 soybean oil output is expected in China (13.9%) and Brazil (4.8%) while reductions are expected in the EU 7 -------------------- (-2.9%) and India (-5.7%). I1Eail ad1 reduced shrimp availability and higher prices. An eas- 1976 1981 1986 1991 1996 ing of prices should occur beginning in May as new supplies become available with the opening of inshore 1200Imports (thousand tons) and open-ocean seasons in April in many countries. Frozen Shrimp, New supplies of Ecuadorian farmed white shrimp Prawns: Wr will become available in June. La Ninia has lowered sea temperatures from 25 to between 18 and 22 de- grees Celsius in Ecuador, and this has reduced catches 600 -- of wild tropical shrimp (FIS Latin America). Japanese imports were reported to be 247,314 300 ------- -- tons in 1999, up 3.5% over 1998 due to the strength- - °s eningof theyenandiimprovedeconomicconditions. 0 , I I I . . Increased Japanese imports came from: Bangladesh 1976 1981 1986 1991 1996 (47%), Ecuador (21%), Vietnam (13.3%), China Annual Prices (¢/kg) (11.11%), Thailand (8.7%), the Philippines (6.3%/6), and 2300 Ct (199 s India (4.6%), while lower imports came from Sri Lanka Constant (1990) (-50%) due to crop failure, and Indonesia (-5.2%) due 1900 i - -------------- to political strife. Imports were down (14.7%) inJanu- - i ary, due in part to delays in harvesting in India (Infofish 1500 ---- Trade News). Import costs have increased in Europe due to 1100- the weak Euro, but Norway's exports of frozen peeled C Mec No. 1) , / Cur~~~~~~~~~~~rent (Mexican No. 1) f:: 0:ES}ff-:f shrimnp for March were up 56% compared to last year, with the main buyers being Great Britain and Sweden. 1975 1985 1995 2005 The EU changed the import tariff on frozen shrimp from Thailand to 14.4% from 4.5% which had been Sourze: FAO, NMSF histonal data, and Wotld Bank forecasts. allowed under the Generalized System of Preferences. 50 GLOBAL COMMODITY MARKETS OTHER FOOD SHRIMP Other Developments * WXith the hclp of a lUS$65,000 NW`orld Bank grant, Thai ing according to Infoport. In the Barents Sea, many are shrimp farmers, processors and exporters, signed a worried stocks are depleting as vessels are changing code of conduct, developed bv the Marine Shrimp to double and triple trawls. Overexploitation is also a Culture Research Development Institute. The code threat to Ecuador's industry and exports have dropped provides standards for sustainable shrimp farming to 69% compared to February of last year. ensure production quality and environmental protec- Aquaculture production schemes are doing well: yields don. have reportedly reached 1,500 kg per hectare in * Resource depletion is a serious concern for the indus- Curacama, Brazil, and 2,000 kg/ha in Sonora, Mexico. try. Nlexico's shrimp production has fallen to only The world average is 950 kg/ha. half of 1998 levels, because of suspected over-fish- PRODUCTION TRADE 1994 1995 1996 1997 1994 1995 1996 1997 Production (000 tons) Exports (000 tons) US 153.0 148.8 143.5 152.2 Ecuador 72.0 86.4 85.7 109.0 India 107.9 101.8 128.4 134.0 India 110.5 98.5 110.7 105.4 Ecuador 72.7 84.9 85.7 109.0 Thailand 178.5 165.7 152.0 79.4 Thailand 191.0 165.7 152.0 79.4 Indonesia 83.8 76.6 79.6 77.6 Indonesia 88.7 78.2 79.6 77.6 Denmark 40.6 34.0 46.7 47.9 Vietnam 63.1 38.7 38.8 41.6 Vietnam 63.1 37.4 35.8 41.6 Mexico 45.9 51.6 44.1 41.4 Mexico 24.4 35.9 35.8 35.7 Greenland 35.0 33.0 34.7 30.8 Bangladesh 31.3 27.7 27.6 31.4 Bangladesh 22.1 26.3 26.5 25.7 Greenland 34.3 33.0 34.7 30.8 Spain 19.4 19.0 21.9 25.3 Canada 18.2 21.2 17.7 21.8 Pakistan 13.8 14.8 16.8 17.7 Pakistan 15.5 14.9 15.6 17.7 Iceland 31.2 35.1 38.7 15.6 World 1,050.4 978.0 1,013.2 n.a. Norway 25.0 16.1 17.8 15.2 Imports (000 tons) Colombia 12.7 11.0 9.8 13.8 Japan 303.5 293.1 289.0 267.6 Panama 9.2 12.2 12.2 13.6 US 263.1 245.2 230.3 259.5 Australia 11.1 14.9 10.8 13.5 Spain 108.2 80.5 82.7 77.0 China. PR 61.0 48.0 56.9 13.5 Denmark 49.9 40.4 53.1 52.8 Philippines 21.7 17.8 21.8 10.1 France 48.3 53.1 55.1 51.6 Korea, Rep 10.0 9.8 7.6 9.8 Canada 16.4 22.6 50.8 34.8 Mozambique 8.2 8.0 6.9 9.5 Italy 28.8 28.2 33.1 28.1 Myanmar ... 4.5 8.7 9.1 UK 27.8 26.6 25.1 25.9 Venezuela 4.7 5.2 7.0 8.6 HK, China 33.2 28.8 29.7 23.0 Taiwan, China 4.3 2.6 2.1 7.5 Belgium 19.7 22.2 21.2 20.7 World 1,143.3 1,060.7 1,063.7 n.a. World 1,068.9 1,003.3 1,033.5 n.a. Source: FAO Source: FAO GLOBAL SUMMARY Actual -Annual Growth Rate (%o)- World Balance (000 tons) 1980 1985 1990 1994 1995 1996 1976-80 1980-90 1990-96 Production 451.4 593.2 838.9 1143.3 1,060.7 1,063.7 2.17 7.56 3.33 Imports 361.9 524.1 905.5 1068.9 1,003.3 1,033.5 5.11 10.63 2.37 Actual Forecast Price (¢/kg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 1,351.6 1,611.6 1,578.9 1,461.0 1,480.0 1,500.0 1,520.0 1,550.0 1,590.0 Constant 1990 __ 1,183.6 1,487.0 1,515.4 1,410.0 1,394.0 1,379.0 1,362.0 1,297.0 1,177.0 Note: Producton, trade, exports, and imports are for the calendar year for frozen shrimp and prawns. Source: FAQ, NMFS historical data, and World Bank forecasts. a p ril 2000 51 AGRICULTURE Sugar Monthly Prices (¢/kg) Another year of surplus production adds to 30 the sugar mountain and sends prices to 14- Free Market year lows. Significantprice increases are not 25 ,-- - expected for several years. 20- NYBOT Sugar prices fell to 14-year lows of 11.27 cents/ Futures kg in March, ending the modest price recovery which 15 ---- --- - ------- began last summer. The fundamentals have not 0 a . changed enough to justify the price decline, but rather 10 .,,,, ........ I the questions is, why did prices rally from depressed Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 levels last summer? World production (October/ World Balance (nillion tons) September) is estimated by the ISO at 134.2 million 150 tons - slightly lower than 1998/99 production of Production 134.6 million tons. World consumption in 1999/00 125 - is estimated at 130.6 million tons leaving a surplus of 3.6 million tons to add to the already large mountain 100 - of sugar. World sugar production has exceeded con- Consuruption sumption for the past six consecutive years accord- 7 _ ________ ing to the ISO. Brazil, the largest producer and exporter, is ex- pected to produce less sugar this year. Brazilian ex- 1970 1980 1990 2000 ports have also slowed because sugar supplies are being diverted to the domestic market where the in- Ending Stocks (million tons) crease in petroleum prices has raised the demand for alcohol produced from sugar. Brazil will begin har- vesting its new crop next month. Australia, the world's W Id second largest exporting country, is not expected to increase production this year because of a series of 50 - ----- cyclones and floods which damaged the crop. Importers such as China, Indonesia and Russia 35 __ ---------------- will not import enough to change the balance in the world sugar market. Russian imports are expected 20 to fall following a surge in imports in 1999 which left 1970 1980 1990 2000 large stocks. India has raised tariffs twice since De- Annual Prices (¢/kg) cember in an effort to slow imports and protect do- 180 mestic producers who are expected to harvest a :onstint(1990) Forecas bumper crop. Most of India's sugar imports come 135 - -tt- - - - - - - - - - - - - - - - - - - - - from neighboring Pakistan which has a bumper crop this year. China has a poor sugar crop and will be- 90 t__-=- come a net importer, but not a large enough net im- porter to absorb large supplies available for export. P A - - The world market remains grossly oversupplied 45 ----- Current according to the ISO's Quarterly Market Review and ...... .. the last time that a large surplus weighted on the mar- 1970 1980 1990 2000 2010 ket (in the mid-80s) it took three years for the surplus to clear. Thus, prices are unlikely to rally significantly Source: International Sugar Organizaton above 14 cent/kg for the next year or more. 52 GLOBAL COMMODITY MARKETS OTHER FOOD SUGAR Other Developments * C. Czarnikow, the international sugar broker, has tons in 1999 from 3.6 million tons in 1998 according launched an internet-based service which includes the to F.O. Licht's International Si(4ar and Sweetener Report. companv's market reports and analysis as well as pric- In response, the Russian government has imposed a ing and trading services. A secure site will provide special 10% duty on raw sugar imports until mid- prices, trading benchmarks, and allow members to June in addition to the existing 5% tariff. The gov- complete transactions ernment also plans to impose a 45% seasonal import * Raw sugar imports to Russia soared to 6.3 million tariff on raw sugar from June 15 to December 15. PRODUCTION AND CONSUMPTION TRADE 1996197 1997/98 1998/99 1999/00 1996/97 1997/98 1998/99 1999/00 Production (000 tons) Exports (000 tons) Brazil 15,269 18,134 21,050 19,750 Brazil 5,995 8,483 11,205 10,450 EU 18,756 18,900 17,900 19,100 EU 5,064 6,158 4,930 6,325 India 13,898 13,859 16,780 17,400 Australia 4,415 4,514 4,142 4,322 China 7,323 8,747 9,702 8,900 Thailand 4,129 2,570 3,270 4,060 US 6,537 7,274 7,555 8,085 Cuba 3,597 2,569 3,030 3,245 Thailand 6,099 4,325 5,475 6,000 Guatemala 1,047 1,324 1,165 1,230 Mexico 4,822 5,492 5,025 5,475 S. Africa, Rep. 939 1,078 1,531 1,130 Australia 5,793 5,395 5,200 5,400 Mexico 742 1,137 605 975 Cuba 4,316 3,284 3,780 4,000 Colombia 808 849 875 850 Pakistan 2,460 3,800 3,775 3,575 Pakistan 0 519 525 275 World 123,698 127,501 133,949 135,160 World 35,410 36,647 38,650 38,881 Consumption (000 tons) Imports (000 tons) India 15,195 16,026 16,225 16,600 Russian Fed. 3,060 4,395 5,900 4,025 EU 14,605 14,100 14,300 14,600 EU 1,902 1,896 1,825 1,825 Brazil 8,800 9,150 9,200 9,300 Japan 1,726 1,660 1,610 1,630 US 8,838 8,923 9,140 9,300 Korea, Rep. 1,446 1,376 1,445 1,470 China 8,050 8,300 8,625 8,800 US 2,620 2,106 1,725 1,400 Russian Fed. 5,325 5,450 5,975 5,995 Canada 1,064 1,068 1,135 1,145 Mexico 4,140 4,416 4,420 4,500 Egypt 1,295 1,210 1,025 1,085 Pakistan 2,910 3,130 3,250 3,300 Iran, Islamic R. 1,390 1,075 1,050 1,075 Indonesia 3,280 2,930 3,000 3,025 Malaysia 1,122 1,010 1,225 990 Japan 2,478 2,530 2,500 2,525 Indonesia 1,690 1,080 1,410 975 World 122,231 125,199 128,140 130,395 World 35,425 36,631 38,419 33,890 Source: ISO Source: ISO GLOBAL SUMMARY Actual -Est.- -Annual Growth Rate ()o-- World Balance (mil. tons) 1970/71 1980/81 1990/91 1997/98 1998/99 1999/00 1970-80 1980-90 1990-98 Production 72.9 83.9 110.7 127.5 133.9 135.2 2.43 1.72 2.12 Consumption 71.9 88.6 107.9 125.2 128.1 130.4 2.22 1.97 1.91 Ending Stocks 30.0 37.7 47.3 59.0 65.8 n.a. 5.02 1.49 2.75 Actual Forecast Price (¢/kg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 26.4 25.1 19.7 13.8 14.0 14.2 14.5 22.0 25.0 Constant 1990 23.1 23.1 18.9 13.3 13.2 13.1 13.0 18.4 18.5 Note: Quantities are in marketing years (October/September), measured in raw value, except word ending stocks, which are in calendar years. Prices are in calendar years. Source: Historcal data from the International Sugar Organization and World Bank price forecasts. april 2000 53 AGRICULTURE Cotton Monthly Prices (¢/kg) The Cotlook A Index reached 126.3 ad/kg in 190 March following two consecutive monthly CotlookAIndex increases in January and Februaryw The 165 ----------------------- recovery in the cotton market is likely to beNYBOT y to be ~~~~~~~~~~~Futures sustainable as production cutbacks are 140 ------------- expected to take place in many countries 140 while consumption recovers. Consumption is 115 ---------- -------- estimated to exceed 20 million tons for the 2000/01 season. The medium staple cotton indicator price Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 (Cotlook A Index) reversed its downward trend to World Balance (million tons) reach 126.3¢/kg in March, almost 30% higher than 22 the December low of 94.7¢/kg (the lowest level since Production September, 1986). The index averaged 116.5¢/kg 19 ------X---- during the first quarter of 2000, up 15.0% from the last quarter's average but 6.0% lower than during the 16 -------- --- - - ------- first quarter of last year. IConsumption Recent global balance estimates released by the 13 .j-r- --------- International Cotton Advisory Committee (ICAC) indicate that world cotton production for the 1999/ 10 ,*,,,,,,,I,,,,,.*.I,*.*...._ 00 season (August to July) will reach 19.66 million 1970 1980 1990 2000 tons, almost 4% higher than last season's crop, while consumption will recover from 19.01 to 19.75 mlu- 12 Ending Stocks (million tons) lion tons, creating a deficit of 625,000 tons. Early World estimates for the 2000/01 season indicate that pro- 9 duction will decline to 18.86 million tons while con- sumption will reach almost 20 million tons. Major production cutbacks are expected to take place in 6 Chi_ Australia (7%), China (29%), Greece (70/o), the Syrian Arab Republic (12%), and Turkey (5%). The US is 3- - ------ expected to increase production by an estimated 24%, .. / < mainly reflecting the reintroduction of the step-2 0 r I, rI ........I...... payment, which this time will include support to pro- 1970 1980 1990 2000 ducers of extra fine cotton. Exports for 2000/01 Annual Prices (1kg) may be as high as 6.36 million tons, up from 5.82 450 million tons in 1999/00. Most of the increase (cur- I Constant (1910) Foecast rently estimated at 400,000 tons) will be accounted 350 ---…---…----------- for by the US. Major import increases are expected for Brazil (18%), India (51%), Japan (17%), and 250 - -a---------- Mexico (42%). The fundamentals in the cotton market have 150-- changed, and the bearish sentiment has been replaced Current by a bullish attitude. Given the estimated deficit of 1.3 million tons for the 2000/01 season, we have 1970 1980 1990 2000 2010 revised our A Index forecast slightly upwards for the year 2000 to 123¢/kg while we expect the A Index Source: ICAC, Cotton Outlook, and World Bank forecasts. to reach 130¢/kg in 2001. 54 GLOBAL COMMODITY MARKETS AGRICULTURAL RAW MATERIALS COTTON Other Developments * Textiles have been on the center stage at the EU/China * Cotton farmers in Australia make much greater use of negotations regarding China's accession to the World futures and options contracts than producers in the US Trade Organization. The EU is expected to face in- at the New York Board of Trade (IYBO'B , accord- creased Chinese textile exports and is currently negoti- ing to the NYBOT's Assistant Vice-President. The US ating a transition period which wll give some breath- cotton programs have reduced farmer's needs for pro- ing space to its textile industrv. The EU had imposed tecfion. Contrary to this, the government of Australia antidumping duties for a brief period on textile im- does not provide any assistance to its cotton growers. ports from a number of (mainly Asian) countries in * After much debate, USDAincreased its estimate of Chi- the last few y,ears. nese stocks from 2.94 to 3.52 million tons for 1999/00. PRODUCTION AND STOCKS TRADE 1997/98 1998/99 1999/00 2000/01 1997/98 1998/99 1999/00 2000/01 Production (000 tons) Exports (000 tons) US 4,092 3,030 3,690 4,200 US 1,695 915 1,400 1,900 China 4,602 4,501 3,900 3,500 Uzbekistan 950 900 950 970 India 2,686 2,710 2,750 2,700 West Africa 815 843 838 890 Pakistan 1,561 1,480 1,800 1,550 Australia 625 650 589 650 Uzbekistan 1,139 1,000 1,160 1,100 Greece 200 230 242 334 West Africa 956 897 900 896 Turkmenistan 58 210 230 298 Turkey 838 880 850 840 Syrian Arab R. 230 180 180 212 Australia 681 726 660 680 World 5,911 5,300 5,820 6,360 Brazil 370 420 569 580 Imports (000 tons) Greece 348 405 410 380 Mexico 330 302 412 586 Turkmenistan 180 200 280 350 Indonesia 425 500 555 536 Syrian Arab R. 355 335 325 300 Italy 350 330 365 370 World 20,053 18,640 19,160 18,860 Korea, Rep. 265 330 360 370 Ending Stocks (000 tons) Turkey 280 250 376 346 China 4,198 4,124 2,944 1,844 Brazil 380 292 284 334 US 844 849 969 1,150 Taiwan, China 275 293 322 310 India 811 1,011 1,017 1,017 Thailand 285 271 295 307 Pakistan 323 353 533 598 India 180 136 200 301 Australia 326 424 443 341 Japan 285 270 230 270 Turkey 100 269 304 206 Russia Fed. 223 179 239 242 World 9,895 9,680 9,080 7,950 World 5,738 5,450 5,820 6,360 Source: ICAC Source: ICAC GLOBAL SUMMARY Actual -Est.- -Annual Growth Rate (%)- World Balance (000 tons) 1970/71 1980/81 1990191 1998/98 1999/00 2000/01 1970.80 1980-90 1990-99 Production 11,740 13,832 18,970 18,640 19,160 18,860 1.23 3.05 0.13 Consumption 12,173 14,215 18,576 19,010 19,754 19,990 1.09 3.17 -0.08 Exports 3,875 4,414 5,081 5,300 5,820 6,360 0.50 2.83 0.27 Ending Stocks 4,605 4,895 6,645 9,680 9,080 7,950 1.77 2.63 2.17 Yields (tons/hectare) 369 411 574 557 589 591 0.92 3.41 -0.55 Actual Forecast Price (¢/kg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 177.3 174.8 144.4 117.1 123.5 130.1 136.7 158.7 180.8 Constant 1990 155.6 161.3 138.6 113.1 116.3 119.5 122.4 132.8 133.8 Note: Crop year begins August 1. Source: ICAC and World Bank april 2000 55 AGRICULTURE Rubber Monthly Prices (¢/kg) The rubber market increased on the gains it 150 made last quarter reaching a high of 74.2ef/ fo.b. Malaysia kg in February. While demand side 120 SICOM fundamentals look strong, much will depend Futures on the fate of INRO's stocks along with the 90 - new rubber supply agreement expected to \ ........ be launched by the three dominant 60- producers. 30 . .......... I. .... , , .. The price signals were mixed this quarter. Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 The Kuala Lumpur rubber indicator price aver- World Production (million tons) aged 70.1/kg in the first quarter of 2000, 3.0% 11 higher than the last quarter of 1999 and 3.1% Synthetic -/° higher than a year ago. Singapore prices gained 9 ----- ------ 2.8% while New York prices declined by 2.2%, over last quarter. 7 ---------------------------- Based on data from the International Rub- / Natural ber Study Group (IRSG) covering the first 10 5------------------_ ---------- months of 1999, global natural rubber produc- tion was 6.52 million tons, almost 3% lower than 3 ...I .. ., in 1998. Thailand, Malaysia, and Indonesia, the 1970 1980 1990 2000 three dominant producers, accounted for 30%, 28%, and 12% of the world total: 1.92, 1.85, and 3.0 World Ending Stocks (illion tons) 0.77 million tons, respectively. Global synthetic rubber production reached 2.5---------------- 10.04 minlion tons in 1999, just 1 % higher than 1998. 2 The US and Japan accounted for 23% and 16% of Synthetic the world total. Consumption of natural rubber in 2.0 … 1999 reached 6.61 million tons, up 62,000 tons from _ 1998, mainly a response to lower prices. Consump- 1.5 t-- ural---- tion of synthetic rubber was 9.58 million tons, very close to the 1998 level. 1.0 ......... . The demand side fundamentals of the rub- 1970 1980 1990 2000 ber market have definitely improved. According Annual Prices (¢/kg) to the latest World Bank report (Global Development 220 F Finance 2000) world income growth for 2000 will , , Const:ant (1990) be 3.5%, up from 2.9% in 1999. Much, however, 170 -'- -F- will depend on the supply side and especially the outcome of the newly proposed supply retention scheme by major producers, as well as whether the INRO stocks will actually find their way to the 70 - market. With the information at hand and consis- rent tent with our January report, we expect prices for 20 .. . . I.. . . . 2000 to average about 700/kg, considerably higher 1970 1980 1990 2000 2010 than in 1999, but still below the 1998 average. Full recovery will take place in 2001 with prices ex- Source: IRSG and World Bank. pected to reach 75/kg. 56 GLOBAL COMMODITY MARKETS AGRICULTURAL RAW MATERIALS RUBBER Other Developments * Following INRO's collapse, the three dominant natu- Cooper Tyre and Rubber, Continental and Sumitomo) ral rubber producers, Thailand, Malaysia, and Indo- are expected to launch an internet-based exchange for nesia are about to sign a rubber agreement. Under the rubber industry. The exchange, which is expected this agreement, supplies of natural rubber will be re- to be running by the end of this vear, would lead to duced when prices fall below a certain level. significant savings due to efficiency gains in purclhas- * Six leading tire groups (Goodyear, Pirelli, Michelin, ing and procurement across the entire industry. NATURAL RUBBER SYNTHETIC RUBBER 1996 1997 1998 1999 1996 1997 1998 1999 Production (000 tons) Production (000 tons) Thailand 1,970 2,033 2,216 1,923 US 2,486 2,589 2,610 2,339 Indonesia 1,527 1,505 1,714 1,850 Japan 1,520 1,592 1,520 1,567 Malaysia 1,083 971 886 772 Germany 548 555 619 699 India 540 580 591 560 Russian Fed. 775 725 621 680 China 430 444 450 460 China 553 600 589 673 Vietnam 218 209 213 211 France 583 595 606 588 C6te d'lvoire 90 108 109 120 Korea, Rep. 516 540 533 546 Sri Lanka 113 106 96 99 Taiwan, China 376 457 472 487 World 6,390 6,380 6,700 6,516 World 9,770 10,090 9,990 10,044 Consumption (000 tons) Consumption (000 tons) US 1,002 1,044 1,157 1,082 US 2,187 2,323 2,354 2,094 China 810 910 839 821 China 870 995 1,000 1,206 Japan 715 713 707 731 Japan 1,125 1,163 1,116 1,115 India 558 572 580 614 Germany 478 501 569 600 Germany 193 212 247 221 Russian Fed. 438 450 358 378 World 6,100 6,460 6,550 6,612 World 9,580 10,000 9,850 9,852 Net Exports (000 tons) Gross Exports (000 tons) Indonesia 1,434 1,404 1,641 1,748 US 732 769 742 798 Thailand 1,763 1,837 1,839 1,603 Japan 477 494 490 552 Malaysia 710 587 425 454 Germany 403 424 458 500 Vietnam 194 194 191 186 France 462 507 497 493 Liberia 30 67 75 89 Korea, Rep. 177 266 342 370 World 4,540 4,490 4,600 4,476 World 4,550 4,990 5,230 5,484 Source: IRSG and World Bank estimates for 1999. Source: IRSG and Word Bank estimates for 1999. GLOBAL SUMMARY Actual -Est. - -Annual Growth Rate (%) - Natural Rubber (000 tons) 1970 1980 1990 1997 1998 1999 1970-80 1980-90 1990-98 Production 3,140 3,820 5,080 6,380 6,700 6,516 1.77 3.19 2.91 Consumption 3,090 3,770 5,190 6,460 6,550 6,612 1.58 3.18 3.17 Net Exports 2,820 3,280 3,950 4,490 4,600 4,476 1.22 2.19 1.33 Ending Stocks 1,440 1,480 1,500 1,990 2,140 2,060 0.45 0.71 1.26 Synthetic Rubber (000 tons) Production 5,880 8,640 9,840 10,090 9,990 10,044 3.45 0.63 0.22 Consumption 5,610 8,830 9,620 10,000 9,850 9,852 3.80 0.46 0.17 Gross Exports 1,460 2,320 3,370 4,990 5,230 5,484 3.67 3.90 5.77 Ending Stocks 1,560 1,740 1,890 2,460 2,600 2,760 1.77 -1.41 5.41 Actual Forecast Prices-Natural (OIkg) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 139.4 101.8 70.9 62.0 70.5 75.0 79.4 88.2 99.2 Constant 1990 122.3 93.9 68.1 59.9 66.5 68.9 71.1 73.8 73.4 Source: IRSG and World Bank. april 2000 57 AGRICULTURE Tropical Timber Monthly Prices ($/cum) Tropical timber prices languished in the first 1000 quarter due to insufficient demand in Japan, Sawnwood (Malaysia) large supplies from Indonesia, and only 775 - ______________________ moderate demand in China. .....s Ph,'wood (a/sheet)~ _1-* 550 .-- It - - -- - - Timber prices stabilized in the first quarter after improving noticably in the second half of 1999. Asian 325 - Logs-(Malaysia) timber prices are very dependent upon demand in Ja- Logs (Malaysia) pan, and the weakening of the yen as well as large in- 100 . ,I * . l l m ventory carryovers from last year have weakened im- Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 port demand. The restructuring of the Japanese tim- World Balance (million cum) ber industry in 1998/99 also led to increased imports 360 of Russian softwoods at the expense of Asian hard- Sawlogs) LO woods. The extended holidays for Moslem Ramadan 270 ----------- and the Chinese New Year further reduced importing activity in January and February and caused meranti log 180 ---------------------------------- prices to linger around $190/cubic meter during the first quarter. Demand in Europe for Asian meranti 90 Imporns (Hardwood Inmports (Tropical timber was dampened by the rise in ocean freight rates Sawlogs) Hardwood Sawlogs) and the weakening of the Euro to the US dollar. West African redwood sapeli log prices remained stable in 1970 1980 1990 2000 French francs, but declined about 5% in US dollar terms during the first quarter. Sapeli sawnwood prices edged 160 World Production (million cum) up about 1% during the first quarter in US dollars and Sawr l-ard-wooId rose about 6% in French francs. Exports from --- - 120 - - - - - - - - - - - - - - - -f - - - - - - - Cameroon are lirnited by the export ban on selected 120 logs while exports from neighboring countries continue. The supply of logs from Indonesia has increased 80 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - _ sharply, contributing to the recent price weakness of Plywood Asian timber. Illegal logging in Indonesia has swelled 40 0 - to more than double the officialy sanctioned produc- tion of 21 million cubic meters according to estimates o made by the Tropical Forest Management Program, a 1970 1980 1990 2000 joint Indonesian and British project. These estimates Annual Prices ($/cum) suggest that Indonesia's log harvest could be at least 400 twice that of Malaysia, which is "officialy" the world's Collstant (199(90) largest tropical timber producer estimated at 30 million 300 - - - - - - - - cubic meters in 1998, according to ITTO. Malaysian timber production has reportedly slowed in favor of 200 - - -s -*- cheaper imports from Indonesia. Plywood from the e region also remains abundant and prices weak. 100 - ------------ Tropical timber prices are expected to make moderate gains due to the gradual increase of Chi- ..(L , Malaysia) j i nese imports and steady demand in Europe, although 1970 1980 1990 2000 2010 the continued sluggishness in Japanese imports and large supplies of logs from Southeast Asia could keep Source: FAO, NIKKEI historical data, and World Bank forecasts. prices subdued in the near-term. 58 GLOBAL COMMODITY MARKETS AGRICULTURAL RAW MATERIALS TROPICAL TIMBER Other Developments * In January, the Consultative Group for Indonesia - to arrest the destruction and degradation of Indone- an alliance between the government, multi-donors, sian tropical forests. These problems include illegal international agencies (including the World Bank), civil logging, natural forest conversion, and industrial over- societies and other stakeholders - reached broad capacity. Follow-up actions by an intergovernmental agreement to take rapid action on urgent problems committee began in February. Hardwood Logs (000 cum) Sawn Hardwood (000 cum) Plywood (000 cum) 1997 1998 1997 1998 1997 1998 Prod. of Sawlogs & Veneer Production Production US 70,721 71,260 US 29,972 28,084 US 17,517 15,732 Brazil 26,000 25,000 India 14,960 14,960 Indonesia 9,600 7,015 Indonesia 32,250 21,444 Brazil 10,500 10,000 China* 8,097 4,978 China* 22,159 20,553 China* 8,195 7,295 Malaysia 4,447 3,904 Malaysia 29,700 20,000 Malaysia 7,176 5,091 Japan 4,257 3,267 World 313,131 293,372 World 116,754 106,425 World 55,968 46,419 Exports of Tropical Hardwood Exports Exports Malaysia 6,593 5,583 US 3,096 3,015 Indonesia 8,500 5,423 PNG 3,006 1,613 Malaysia 3,007 2,735 Malaysia 3,825 3,520 Gabon 3,000 1,600 Canada 1,022 1,183 US 1,596 858 Cameroon 1,706 1,280 HK, China 735 837 Canada 863 848 HK, China 548 742 Brazil 885 749 Russian Fed. 631 723 World 18,186 14,097 World 16,802 17,155 World 20,593 16,387 Imports of Tropical Hardwood Imports Imports China* 4,439 3,723 China* 2,607 2,377 Japan 5,422 3,938 Japan 5,854 3,427 Italy 1,760 2,021 China* 2,373 2,520 India 704 1,323 US 1,160 1,368 US 1,868 2,150 HK, China 843 914 Japan 1,789 1,060 HK, China 1,074 1,078 France 675 780 Spain 900 1,017 Germany 1,095 1,074 World 17,617 14,470 World 21,066 20,929 World 19,522 18,608 Source: FAO Source: FAO Source: FAO GLOBAL SUMMARY Actual -Annual Growth Rate (%/o)- World Balance (mil. cum) 1970 1980 1990 1996 1997 1998 1970-80 1980-90 1990-98 Hardwood logs prod.** 210 262 300 315 313 293 1.49 1.65 0.73 Hardwood logs imports** 36.1 42.2 25.1 16.7 17.6 14.5 0.07 -4.77 -6.81 Sawn hardwood prod. 98.5 115.8 131.8 120.6 116.8 106.4 1.17 1.74 -1.95 Sawn hardwood imports 7.1 13.2 16.1 19.1 21.1 20.9 4.97 2.50 3.67 Plywood production 33.4 39.4 48.2 52.4 56.0 46.4 1.16 2.04 0.34 Plywood imports 4.9 6.0 14.9 19.1 19.5 18.6 0.75 8.91 4.38 Actual Forecast Prices ($/cum) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Logs, current 252.1 238.3 162.4 187.1 210.0 225.0 235.0 255.0 290.0 Logs constant 1990 220.8 219.8 155.9 180.7 197.8 206.8 210.5 213.4 214.7 Sawn hardwood, current 741.4 663.8 484.1 600.8 640.0 660.0 680.0 755.0 900.0 Sawn hardwood constant 1990 649.2 612.4 464.7 580.2 602.9 606.6 609.2 631.7 666.2 *Including Taiwan, China. **Imports for 1970-89 and producton for all years refer to hardwood sawlogs and veneer logs. Imports from 1990 onwards are tropical hardwood sawlogs and veneer logs. Source: FAO, NIKKEI historical data, and Word Bank estimates and forecasts. april 2000 59 FERTILIZERS Nitrogen Monthly Prices ($/ton) Urea prices were 27% higher during the first 220 quarter, due to production cuts by major producers and increased demand. Prices are 180 ----------------________ expected to hold recent gains unless Urea production cutbacks are reversed. 140 - E. Europe (bagged) Urea fertilizer prices continued to increase in January and February before retreating in March. The 100 - - - combination of production cutbacks in Europe and the US combined with improved demand are largely 60 ,* , * , l* *,, ***I,, * *, . * **,, * * credited for the recovery. However, the industry still Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 has surplus capacity and prices could fall if produc- World Balance (million tons) tion cuts are not maintained. Improved demand 100 largely reflects recent crop price increases, and future Production demand will be closely linked to crop prices. 80 ------------- Bulk urea prices, f.o.b. Eastern Europe, aver- aged $85.2/ton during the first quarter, up 27% from 60 - ------------------- the fourth quarter. March prices fell to $84.4/ton Consumptiont after reaching a high of $91.4/ton in February. An 40 ----------------------- increase in import demand in Asia, Europe, Turkey, and the United States at the end of last year have 20 . . ......... . . given way to lower demand in recent months. How- 1970 1980 1990 ever, with spring planting soon to begin in the north- ern hemisphere, prices could regain February highs. 300 World Trade (million tons) US traders reported surging prices as dealers stocked- up for spring planting and some buyers expressed "sticker-shock" compared to the favorable pricesle5pn faced one year ago. Impor Exports While European and US producers were cut- 15.0 --- ting production, Russian producers were increasing production and exports. Russia was the world's larg- 7.5 --------------------- est exporter in 1999 with 15% of urea exports. Overall, nitrogen fertilizer output in Russia surged 0 25% in 1999 and urea exports totaled 3.36 million 1970 1980 1990 tons, up 25% over 1998 according to FertiIi.er WIeek. Annual Prices ($/ton) Pakistan imposed a 1/0% import duty on urea at 800 the end of 1999 to protect domestic producers from a Coiistant (1990) aggressively priced imports according to Fertilirer 600 _- -------------------- Week. New capacity in Pakistan is expected to have raised 1999 production by 4% and a further increase 400 - - - .- - - - of 8% is expected in 2000. This new capacity comes at a bad time as domestic urea sales during the first / - " 200 --------' quarter were down 15% because of drought. In an effort to ease the pressure on domestic prices, the Current (Urea) Ministry of Food and Agriculture has approved 0 1970 1980 1990 2000 2010 producer's plans to export about 100,000 tons of urea during 2000. The domestic surplus of urea is esti- Source: FAG,FertikerWeek,andWoridBank mated to total 400,000 tons. 60 GLOBAL COMMODITY MARKETS NITROGEN Other Developments * The Indian government announced a three year mora- duce a plan for the phased removal of India's Reten- torium on domestic grassroots urea plants in Febru- nion Pricing Scheme in a fertilizer sector reform, Fer- arv, saying it could not guarantee that proposed ex- tilii.er IFeek, 3/6. pansions to existing units would be included in the * Urea production in Mexico is expected to restart fol- exisung Retention Pricing Scheme which automati- lowing an agreement between Mexico's Energy Min- cally allows a 12%/) after tax return on capital invest- istry, Pemex, petrochemical sector unions, and do- ments according to Ferti/ker Week, 2/14. The De- mestic nitrogen fertlizer producers. Production halted partment of Fertlizer announced intentions to intro- last May at Agromex, Mexico's sole urea producer. PRODUCTION AND CONSUMPTION TRADE 1994/95 1995/96 1996/97 1997/98 1994195 1995/96 1996/97 1997/98 Production (000 tons) Exports (000 tons) China 16,689 18,633 21,042 20,538 Russian Fed. 2,814 3,661 3,646 3,122 US 14,017 14,244 15,226 15,372 US 2,902 2,997 2,989 3,038 India 7,944 8,769 8,593 10,083 Canada 1,955 2,179 2,090 1,878 Russian Fed. 4,027 4,713 4,900 4,293 Netherlands 1,480 1,457 1,505 1,435 Canada 3,801 4,019 4,049 4,122 Ukraine 1,301 1,231 1,464 1,418 Indonesia 2,565 2,858 3,045 3,059 Indonesia 740 914 711 1,087 Ukraine 1,935 1,871 2,083 2,022 Bel-Lux 1,001 978 1,043 1,074 Netherlands 1,785 1,595 1,772 1,848 Saudi Arabia 911 788 845 806 Pakistan 1,547 1,693 1,682 1,661 Poland 457 637 520 590 Poland 1,269 1,469 1,549 1,545 Germany 630 831 676 561 World 82,746 86,004 90,973 90,092 World 22,433 25,157 24,894 23,957 Consumption (000 tons) Imports (000 tons) China 19,216 23,383 25,277 23,260 US 4,702 4,569 4,132 4,697 US 10,631 11,161 11,206 11,163 China 2,577 4,897 4,423 2,955 India 9,507 9,823 10,302 10,905 India 1,473 2,008 1,156 1,375 France 2,309 2,392 2,525 2,518 Germany 1,249 1,218 1,165 1,224 Pakistan 1,738 1,984 1,985 2,088 France 1,218 1,306 1,222 1,112 Indonesia 1,649 1,844 2,084 1,838 Vietnam 903 785 937 952 Germany 1,787 1,769 1,758 1,788 Italy 679 600 736 787 Canada 1,456 1,576 1,671 1,708 Thailand 687 780 811 779 Brazil 1,225 1,151 1,197 1,306 Brazil 494 426 495 686 UK 1,339 1,328 1,438 1,251 Australia 428 493 628 679 World 72,247 77,986 83,017 81,177 World 21,815 25,097 24,838 24,646 Source: FAO Source: FAO GLOBAL SUMMARY Actual -Annual Growth Rate (%)- World Balance (mil. tons) 1970/71 1980/81 1990/91 1995/96 1996/97 1997/98 1970-80 1980-90 1990-96 Production 33.3 62.8 81.9 86.0 91.0 90.1 6.53 3.12 0.03 Consumption 31.8 60.8 77.2 78.0 83.0 81.2 6.86 2.60 -0.49 Exports 6.8 13.2 20.0 25.1 24.9 24.0 7.23 5.10 2.69 Actual Forecast Urea Prices ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 187.5 127.9 103.1 77.8 90.0 100.0 110.0 120.0 140.0 Constant 1990 164.5 118.0 98.9 75.1 84.8 91.9 98.5 100.4 103.6 Note: Quantites are for total nitrogen fertilizer in marketing years and prices are for urea, bagged, spot, f.o.b. Eastern Europe in calendar years. Source: FAO and World Bank. april 2000 61 FERTILIZERS Phosphates Monthly Prices ($/ton) Phosphate fertilizer prices remained steady 260 this quarter after falling sharply last year. DAP Production cutbacks by major producers and 220 r-------------------------------- delays at new plants in Australia and India supported prices along with improv-ed 180- demand prospects. Firm phosphate rock prices also supported phosphate fertilizer prices. 140 Phosphate fertilizer prices remained essentially 100 ........... I . ......... unchanged from last quarter after falling sharply from Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 year-ago levels. DAP prices averaged $149.5/ton World Balance (million tons) during the first quarter, up less than 1.0% from the 50 previous quarter and TSP prices were down 1.7% Production from last quarter at $138/ton. Production cutbacks 40 ___ -------- introduced by major producers over the past six months have tightened the market, and demand has 30 ---- _ _-_ increased with the prospects of higher crop prices in , onsunipti 2000. In addition, delayed start-ups of the WMC 20 ----------------------------_-___ plant in Australia and the Oswal complex in India have kept new product off the market. lo . a,,,,,,,, I . Earlier estimates that the WXestern Mining Cor- 1970 1980 1990 poration (WMIC) complex at Phosphate Hill, Aus- tralia would produce 800,000 tons of DAP in 2000 20 World Trade (million tons) are being scaled back to 600,000 tons. Production estimates at the Oswal plant in India have also been scaled back as the plant was operating at only 30% 15- of capacity in early April according to industry esti- mates. More supply came off the market when two 10 _ _ _ _ Ukrainian phosphate producers, with combined ca- pacity of about 800,000 tons, stopped production 5 ° in March due to increased production costs and weak international prices. A Russian producer of about equal 0 size to the two Ukrainian producers is also reported 1970 1980 1990 to be near closing due to weak international prices. Annual Prices ($/ton) Phosphate rock prices have remained firm and this 800 has helped to halt the decline of fertilizer prices. Const m 99(F)cs Increased demand has also helped halt the de- 600 -t - - - - - - - - - - - - - - - - - - - - - - - - - - - _ cline in phosphate fertilizer prices. Imports of DAP : by China totaled 5.2 million tons in 1999, with the 4 a bulk of the product being supplied bv the US ac- cording to Ferti/izer Week, 2/14. PhosChem an- 200 - - - - - _ nounced a contract to supply 1.1 million tons of DAP for shipment to China in May-December. Recent sales Current (TSP) to Pakistan and Vietnam have also contributed to a 1970 1980 1990 2000 2010 firmer market. Brazil is emerging as a strong buver following last year's 9% decline in imports compared Sorce: FAO, Ferilker Week, and Wbrld Bank. to 1998. 62 GLOBAL COMMODITY MARKETS PHOSPHATES Other Developments * Plans are underway to develop Guinea-Bissau's Farim * The Indian government is expected to cut the subsidy phosphate rock deposit into a dry-pit mine expected on imported and domesticallv produced DAP foi- to produce 1.5 million tons of phosphate rock per lowing a subsidy cut on imported phosphoric acid. year. The niine wnill be devcloped by Canada's Cham- The subsidy on domestically produced DAP aver- pion Resources and operated under contract with aged $91 /ton in the year just ended according to Fei- Met-Chem Canada and Time Mining. Most of the tili7er Week, 4/3. India imported 3.2 million tons in funding for the $112 million project will be provided the twelve months ending in March, and the subsidv by a group of South African banks. may be cut by as much as 35% according to industry sources. PRODUCTION AND CONSUMPTION TRADE 1994/95 1995/96 1996197 1997/98 1994/95 1995/96 1996197 1997/98 Production (000 tons) Exports (000 tons) US 11,055 10,500 10,900 10,765 US 6,335 5,838 5,679 5,716 China 5,045 6,091 5,822 6,482 Russian Fed. 1,397 1,525 1,130 1,294 India 2,587 2,626 2,615 3,090 Morocco 769 B11 858 846 Russian Fed. 1,716 1,933 1,575 1,777 Tunisia 674 686 703 637 Brazil 1,429 1,265 1,305 1,353 Mexico 81 267 273 343 Morocco 894 936 979 921 Bel-Lux 194 270 282 333 France 667 668 682 687 Netherlands 459 390 285 320 Tunisia 721 741 790 673 Jordan 318 318 328 256 Spain 422 413 478 488 Norway 179 207 207 208 Mexico 373 427 433 469 Poland 91 175 135 197 World 32,808 33,847 34,020 34,925 World 12,329 12,568 11,994 12,146 Consumption (000 tons) Imports (000 tons) China 7,020 8,913 8,521 9,339 China 2,023 2,936 2,803 2!950 US 4,014 4,107 4,184 4,195 Australia 519 612 651 716 India 2,932 2,898 2,977 3,917 India 376 686 219 707 Brazil 1,931 1,575 1,705 1,943 Brazil 517 341 446 703 France 1,030 1,032 1,052 1,120 France 600 568 561 568 Australia 923 965 985 1,100 Italy 500 538 524 508 Canada 628 658 704 705 Pakistan 283 272 381 416 Japan 703 631 611 594 Thailand 379 453 436 380 Turkey 444 580 578 592 UK 377 349 343 345 Pakistan 429 494 419 551 Canada 286 292 377 343 World 29,271 30,908 31,428 33,466 World 10,543 11,738 12,005 12,629 Source: FAO Source: FAO GLOBAL SUMMARY Actual -Annual Growth Rate (%)- World Balance (mil. tons) 1970/71 1980181 1990191 1995/96 1996/97 1997/98 1970-80 1980-90 1990-96 Production 22.0 34,5 39.0 33.8 34.0 34.9 3.72 1.70 -3.57 Consumption 21.1 31.7 36.3 30.9 31.4 33.5 3.85 1.39 -3.87 Exports 2.9 7.5 10.7 12.6 12.0 12.1 8.37 5.01 1.57 Actual Forecast TSP Prices ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 175.8 171.9 173.1 154.5 145.0 150.0 155.0 160.0 170.0 Constant 1990 154.3 158.6 166.1 149.2 136.6 137.9 138.9 133.9 125.8 Note: Quantities are for total phosphate fertilizer in marketing years and prices are for TSP, bulk, spot, f.o.b. US Gulf in calendar years. Source: FAO and World Bank. ap ril 2000 63 FERTILIZERS Potash Monthly Prices ($/ton) Potash fertilizer prices edged higher following 140 larger than expected imports from China and strict supply controls by some producers. 130 ---------------------------------- However, global production and trade were both lower in 1999. 120 - - -- Potassium The potash market ended the first quarter firm Chloride with contract negotiations for first-half deliveries 110 ____-____-____-_-____-____-__-_ showing increases of $2-3/ton over second-half 1999. Potassium chloride prices, fo.b. Vancouver, 100 , E 1 i l were reported at $122.5/ton prior to the contract Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 settlement. Canpotex, the Canadian export market- World Balance (million tons) ing organization, reached agreement with Chinese 40 importers and this was quickly followed by agree- Production ments involving Japan and Republic of Korea at 30 __-___-_-_-_-__ - -__-_-_ the higher prices. Prices in the US's mid-west are $3-6/ton higher than during the end of last year. 20 - - --------- Potash prices have remained firm, and even Consumption increased over the last several years, while other fer- 10 _-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_ tilizer prices have declines. The difference can largely be traced to the concentration of potash exports . . .,,_._. .. . I, ._._._._.._I_._._ ..... among a few companies and the willingness of some 1970 1980 1990 of these companies to curtail production and re- duce sales rather than see prices fall. Global produc- 25 World Trade (million tons) tion in 1999 is estimated to have fallen about 1.6 million tons (about 6%) from 1998 levels in response Imports to weaker demand, and trade is estimated to have declined about 400,000 tons (about 2%) according to the World FertiliZer Reziew. 15 Exports Canada accounts for about 40% of world exports, and Potash Corporation of Saskatchewan, 10 _-____-__-____-__-____-__-____ is one of the world's largest fertilizer producers. In 1999, the company produced 15% of global pot- 5 . . . .*. ash production, had 24% of global potash capacity 1970 1980 1990 and an estimated 60% of global excess potash ca- Annual Prices ($/ton) pacity according to company reports. Not all pro- 200 ducers have followed the lead set by the Canadian Constant (1990) company. For example, Russian potash production 150 - - v -_ - - - - - - - - - - - - - - rose 17% in 1999, with the bulk of the increase com- ing from Uralkali according to FertiZer Week, 2/14. 100- o -- - -4 Demand has started to recover from the de- clines of the last several years. Brazil, one of the coun- tries hardest hit by the financial turmoil which fol- lowed the Asian financial crisis, saw potash imports 0 - - - - -- fatl 9% in 1999. However, demand began to re- 1970 1980 1990 2000 2010 cover in late-1999 and the prospects of higher crop prices in 2000 could contribute to further increases inSore: FAO, Fen'ilirer Week, and World Bank. demand. 64 GLOBAL COMMODITY MARKETS POTASH Other Developments * Canpotex, the Canadian export agency for * The Sea Port of St. Pctersburg is planning to build a Saskatchewan potash producers, announced that it has new potash handling complex which could rival the reached agreement with JSC Uralkali, a Russian pot- newly inaugurated Kalija Parks potash terminal in ash producer, to form a joint marketing arrangement Ventspils, Latvia. The project will be based on re- in certain offshore markets. The agreement is subject conditioning existing berths at the port, and future to approval of the respective Boards of directors, plans are to handle other fertlizers, especially nitro- but if approved, it would tighten links between ma- gen according to FertiIiter Week, 4/10. 'The complex jor Canadian and Russian producers. will have a loading rate of about 35,000 tons per day. PRODUCTION AND CONSUMPTION TRADE 1994/95 1995196 1996197 1997/98 1994/95 1995/96 1996/97 1997/98 Production (000 tons) Exports (000 tons) Canada 9,060 8,065 8,151 9,029 Canada 8,216 7,851 8,077 9,015 Germany 3,286 3,278 3,334 3,423 Germany 2,802 2,446 2,549 2,838 Russian Fed. 2,493 2,814 2,618 3,403 Russian Fed. 2,027 2,317 1,947 2,830 Belarus 2,510 2,789 2,716 3,247 Belarus 1,917 2,189 1,978 2,506 Israel 1,260 1,326 1,500 1,488 Israel 1,327 1,286 1,203 1,632 US 827 843 834 883 Jordan 910 1,058 1,052 861 Jordan 930 1,068 1,059 849 US 538 523 597 846 France 870 802 751 665 France 596 538 538 588 Spain 684 637 681 639 Spain 410 489 470 498 UK 580 582 618 565 UK 385 374 371 373 World 23,077 22,767 22,876 24,947 World 20,348 20,634 20,128 23,370 Consumption (000 tons) Imports (000 tons) US 4,652 4,770 4,921 4,847 US 4,759 5,181 5,073 5,784 China 2,444 2,887 2,337 3,390 China 2,261 2,870 2,258 3,291 Brazil 1,866 1,791 1,941 2,242 Brazil 1,643 1,539 1,826 2,132 France 1,373 1,491 1,488 1,434 India 1,282 1,424 667 1,437 India 1,125 1,156 1,030 1,373 France 1,274 1,230 1,341 1,418 Malaysia 700 603 646 670 Malaysia 708 660 631 701 Germany 668 652 646 659 Poland 386 456 502 509 Spain 417 415 451 479 Italy 439 461 440 447 UK 475 473 485 450 Japan 485 490 439 431 Belarus 300 250 422 425 Korea, Rep. 333 353 417 407 World 20,084 20,690 20,675 22,611 World 19,906 20,472 19,717 23,043 Source: FAO Source: FAO GLOBAL SUMMARY Actual -Annual Growth Rate (% )- World Balance (mil. tons) 1970/71 1980/81 1990/91 1995196 1996/97 1997/98 1970-80 1980-90 1990-96 Producton 17.6 27.5 26.7 22.8 22.9 24.9 3.97 -0.03 -4.47 Consumption 16.4 24.2 24.5 20.7 20.7 22.6 3.93 0.05 -4.82 Exports 9.5 16.7 18.1 20.6 20.1 23.4 4.89 0.73 2.06 Actual Forecast MOP Prices ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 116.9 116.5 116.9 121.6 122.5 124.0 124.0 125.0 127.0 Constant 1990 102.6 107.5 112.2 117.5 115.4 114.0 111.1 104.6 94.0 Note: Quantties are for total potash fertilizer in marketng years and prices are for potassium chloride, also known as muriate of potash (MOP), f.o.b. Vancouver, in calendar years. Source: FAO and World Bank. ap ri l 2000 65 METALS AND MINERALS Aluminilumi Monthly Prices ($/ton) Prices peaked in January on an LME squeeze, 1750 but heavy liquidation was triggered by the re- LME Cash LME Futures start of idle capacity. Prices are expected to 1600 - -- --- rebound due to strong growth in demand and \ 0 the shrinking market surplus. 1450 - --- ----_ Aluminum prices were 9.50 a higher in the first quarter on expectations of a tight market and a 1300 squeeze on LLME short positions. However, after peaking above $1,700/ton in January, a heavy wave 1150 ...,, , , ,, , of speculative selling pushed prices below $1,500/ Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 ton in early April. World Balance (million tons) Bullish sentiment at the start of this vear was 24 fueled by potential production problems at efined Aluminum Production ber of Russian smelters, the tight alumina market, 20 ---------------- and accelerating grow-th of global demand. As the market became increasingly overbought, the an- 16 --------- --------- nouncement on January 19 by Alcoa of the restart of 200,000 tons of idle capacity triggered the sell- 12 - - ------------------------- off. The decline occurred despite Pechiney declar- n ing,force majeure on shipments from its Dunkirk smelter, ,, , ,, . . ., ., .I.o...r. o . because of strike action by most of its workforce. 1970 1980 1990 2000 The LME squeeze led to large backwardation that drew significant volumes of metal onto the Ending Stocks (thousand tons) LME, as it became profitable to "lend" metal to the 3000 market. LME inventories rose 12% from the start of the year to 869,000 tons on February 23, and then 2250 _-- ---------------- A fell to 755,000 tons at the end of March as contango reappeared. Inventories leaving LME warehouses 1500 -------------------- t -A are most likely going back into unreported stocks, lQ00 rather than consumption, and is not being taken as a 750-- _ --- bullish signal on demand. The oudook for the tight alumina market has 0 improved with the restart of the Ghyandia refinery 1970 1980 1990 2000 in Azerbaijan. Kaiser's Gramercy refinery is due to Annual Prices ($/ton) re-start in the second half of this year and will be 3000 fullv operational at the end of 1Q 2001. Conse- C Forecast 1 (Constant (1 9%)0) quently, the market is expected to tilt into surplus 2250 - . ------,-a-_-_ next vear and alumina prices are expected to decline A A significantly.1 Aluminum prices are expected to rebound due to strong growth in global demand, albeit with an 750 ---_-_-_ ---- i---- expected slowdown in the US. The market surplus Current is expected to shrink this year but could widen in C . 2001 with the start-up of new and idled capacitv. 1970 1980 1990 2000 2010 Consequently, prices are expected to be flat next vear, with risks to the downside depending on the pace Source: LME,WBMS,and WorldBankforecasts. of global demand. 66 GLOBAL COMMODITY MARKETS ALUMINUM Other Developments * AME Mineral Economics reported that the average ton in 1999. This was slightly ahead of Canada's $1,008/ cost of production from 1994 to 1999 fell by almost t while Russia and the USA were well up along the cost 16%'),o from $1,342 to $1,132 per ton, but predicts that curve at $1,143/ton and $1,296/ton, respectively. The the cost will drop only by a further $14 per ton in 1999 UK was the highest cost producer last year with an dollar terms to $1,118 in 2004. AME says that apart average cost of production of just under $1,500/ton. from the US dollar exchange rate the drop in produc- * Pechinev has withdrawn from the proposed merger tion cost over the last five years can be largely attrib- with Alcan and Algroup, after the three companies de- uted to low metals prices, as the price of major cost cided that divestments demanded by the European inputs, alumina and power, are often related to alu- Commission would undermine the strategic viability minium prices. Technological improvements which saw of the combined company's rolled products business older plants being upgraded or closed to be replaced in Europe. Alcan and Algroup will now proceed with bv more efficient capacity were also contributing fac- their merger plans through an offer to the Swiss tors. Australian smelters had an average cost of $9P2/ company's shareholders. PRODUCTION OF REFINED ALUMINUM (000 tons) CONSUMPTION OF REFINED ALUMINUM (000 tons) 1996 1997 1998 1999 1996 1997 1998 1999 US 3,577 3,603 3,713 3,779 US 5,348 5,390 5,814 6,204 Russian Fed. 2,874 2,906 3,005 3,146 China 2,135 2,260 2,425 3,054 China 1,771 2,035 2,336 2,618 Japan 2,393 2,434 2,080 2,093 Canada 2,283 2,327 2,374 2,390 Germany 1,355 1,558 1,580 1,431 Australia 1,370 1,490 1,626 1,714 Korea, Rep. 674 666 506 808 Brazil 1,197 1,189 1,208 1,250 Canada 620 628 734 754 Norway 862 919 996 1,020 France 672 724 744 744 S. Africa, Rep. 617 683 693 687 Italy 585 671 674 737 Germany 577 572 612 634 India 585 553 567 554 India 531 547 542 614 UK 600 619 668 520 Venezuela 635 641 584 567 Spain 360 430 460 503 Bahrain 461 490 501 501 Taiwan, China 310 374 301 464 UAE 259 378 387 500 Brazil 497 479 521 463 Spain 362 360 360 364 Belgium 331 345 370 370 New Zealand 285 310 318 327 Australia 322 352 367 343 Netherlands 227 232 264 285 Norway 169 200 154 218 UK 240 248 258 272 Greece 156 204 213 213 Tajikistan 198 189 196 229 Sweden 129 142 177 176 Iceland 103 123 173 222 Hungary 159 183 164 175 Other 2,407 2,557 2,462 2,546 Other 3,227 3,546 3,377 2,997 World 20,836 21,799 22,606 23,664 World 20,627 21,760 21,895 22,820 Source: WBMS Source: WBMS GLOBAL SUMMARY Actual - Annual Growth Rate (°O) - World Balance (000 tons) 1970 1980 1990 1997 1998 1999 1970-80 1980-90 1990-98 Production 10,257 16,027 19,362 21,799 22,606 23,664 3.1 2.0 2.3 Consumption 9,996 14,771 19,244 21,760 21,895 22,820 3.1 2.0 2.1 LME Ending Stocks 0 68 311 622 636 775 n.a. -0.3 -1.5 Actual Forecast Price ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 1,506 1,599 1,357 1,361 1,600 1,600 1,650 1,800 1,900 Constant 1990 1,318 1,476 1,303 1,314 1,507 1,471 1,478 1,506 1,407 Source: WBMS and LME data, and World Bank forecasts. april 2000 67 METALS AND MINERALS Copper Monthly Prices ($/ton) After peaking in January prices slipped on 2800 concerns about prospects for global economic LME Cash activity. Prices are expected to recover as the 2400 ---------------------------- market surplus diminishes. LME Futures Copper prices were 3.2% higher in the first quar- 2000 _--- ter, extending the rally of the past year that has been \ fueled by expectations of strong demand growth 1600 - - - and shrinking market surplus. After peaking inJanu- ary, however, prices fell 9% on concerns over high 1200 ,,I inventories and the prospects for global economic Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 growth. Still, Mfarch prices werc 26% higher than World Balance (million tons) the lows of a year earlier, and a seasonally strong 15 second quarter offers the potential for further price RefinedCoppeProduction gains, particularlv if investment funds return to the 13 - ------ market. I-ME inventories fell 10% during March, but 1----- end-month stocks of 755 thousand tons (kt) remains historically high. Much of the decline in March was 9 ------------------- destined for China because of arbitrage opportuni- ties between the Shanghai and LNIE exchanges. Wh,ile ? Constimptio.n it is difficult to know how much of the materialwill 1970 1980 1990 2l000 simply wind up in inventory, a sharp increase in cop- per intensive electrical exports and ongoing programs Ending Stocks (thousand tons) to upgradc power anid teleconmmuniication networks 81 suggests that a significant portion will be consumed. Elsewhere demand remains very strong in the 600 - A t US, led bv buoyant auto and construcuon sectors. European economic activity continues to improve, 400 - --- --- with strong growth in the auto industry, while con- struction remains relatively weak, especially in Ger- 200 - ---- many. Asian demand continues to recover outside of Japan, with especially strong growth in the Re . .. I. . . . . . . public of IKorea and Taiwan, China. W,orld demand 1970 1980 1990 2000 growth is expected to average 4% in 2000, with in- Annual Prices ($/ton) creases in nearly all main regions. 6000 WVorld refined copper production is projected (>n 1iarii j990) Forecast to increase by 2.5%, resulting in a diminished market 4500 ------------…------------- surplus of about 100 kt. Much of the growth in 3j copper mine production is expected to occur in Chile, 3000 - - - - - - - - - - - - - - - - - - - Indonesia, and Australia, with smaller increments in a /5v number of other countries. This projection includes J- a number mine reaetivations that have occurred in Current recent months. The market is expeeted to move into defieit in 0 ' ' ' 2010 2001 leading to a reduction in inventories and higher Sore 1980 and 2000 2010 prices. The outlook is dependent on strong growth Source i.ME, WBMS, and Nbr1d Bank forecasts in demand and the extent of re-started idle capacity 68 GLOBAL COMMODITY MA]RKETS COPPER Other Developments * Codelco, the world's largest copper producer, saw its * On March 31, Zambia completed privatization by production rise by 7% in 1999 to 1.62m tons. The selling a number of Zambia Consolidated Copper company reported total sales of $2.8bn wAith copper Mines' (ZCCM) assets to Konkola Copper Mines contributing $2.5bn, up 9%. Codelco had pre-tax (KICM), a new Zambian company owned 65%/o by profits of $572m in 1999, up 60% despite copper Anglo American subsidiary ZCI, 20% by ZCCM and prices being 4 cents per lb lower. Codelco achieved 7.5% by the IFC and Commonwealth Development this result by cutting production costs by 9 cents per Corp. In a simultaneous transaction, the Mufilira di- lb - aided pardy by employees taking salary cuts. vision and the Nkana mines of ZCCM were sold to * Codelco expects production to be essentially un- Mlopani Copper Mines, a joint venture between changed in 2000, according to the company's new Glencore International and First Quantum Minerals. president, Juan Villarzu. The company has raised ZCCM through the transactions has been transformed output 50% since 1994. into an investment holding company with investments in the privatized mines. PRODUCTION OF REFINED COPPER (000 tons) CONSUMPTION OF REFINED COPPER (000 tons) 1996 1997 1998 1999 1996 1997 1998 1999 Chile 1,748 2,117 2,335 2,665 US 2,621 2,790 2,883 3,015 US 2,347 2,450 2,460 2,137 China 1,193 1,270 1,397 1,345 Japan 1,251 1,279 1,277 1,342 Japan 1,480 1,441 1,255 1,294 China 1,119 1,179 1.211 1,045 Germany 960 1,039 1,138 1,150 Germany 671 674 696 696 Korea, Rep. 598 621 560 790 Russian Fed. 599 640 656 640 Taiwan, China 544 588 584 655 Canada 559 561 563 540 Italy 504 521 590 644 Poland 425 441 447 464 France 518 558 583 514 Korea, Rep. 246 265 369 449 Mexico 192 252 341 439 Mexico 246 297 445 445 Belgium 332 329 324 330 Peru 342 384 411 427 UK 396 408 374 305 Australia 311 271 285 419 Brazil 233 258 301 292 Belgium 386 373 368 368 Canada 218 225 246 266 Kazakhstan 267 301 325 362 Poland 226 230 266 261 Spain 264 292 304 305 Spain 191 203 235 239 Zambia 317 328 306 260 Turkey 160 188 208 221 Brazil 172 172 167 195 India 140 160 200 220 India 39 66 134 173 Australia 160 160 155 167 Phillippines 156 147 152 150 Russian Fed. 165 165 165 165 Other 1,266 1,356 1,236 1,221 Other 1,570 1,616 1,589 1,589 World 12,732 13,592 14,147 14,301 World 12,401 13,021 13,394 13,901 Source: WBMS Source: WBMS GLOBAL SUMMARY Actual -Annual Growth Rate (%o) - World Balance (000 tons) 1970 1980 1990 1997 1998 1999 1970-80 1980-90 1990-98 Producton 7,583 9,242 10,809 13,592 14,147 14,301 2.0 1.1 3.3 Consumpton 7,294 9,400 10,780 13,021 13,394 13,901 2.4 1.1 2.9 LME Ending Stocks 72 123 179 338 592 790 7.5 -6.0 3.7 Actual Forecast Price ($/ton) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 2,295 2,277 1,654 1,573 1,800 1,900 2,000 2,200 2,400 Constant 1990 2,010 2,101 1,588 1,519 1,696 1,746 1,792 1,841 1,777 Source: WBMS and LME data, and World Bank forecasts. april 2000 69 METALS AND MINERALS Gold Monthly Prices ($/toz) Prices were generally supported by 400 announcements that several producers would limit or suspend their hedging programs, but 360 ---------------------------------- concerns about central bank sales sent prices Spot lower in late March. 320 - - - - - - - - - - - - - - COMEX Futures Gold prices averaged $290/toz in the first quar- 280- - ---------- ter, down less than 2% from 4Q99, supported in part by producer buy-backs, as several producers 240 ......,,,.. I,. .. .....,,.l.I.,,,., announced they would limit or suspend their gold Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 hedging programs. In late-March, however, con- Production (tons) cerns about central bank sales - both actual and po- 2400 tential - caused prices to fall to near $275/toz. Ru- World mors that France might mobilize part of its reserves 1800 - --------- was the latest in a series of reports that have exerted downward pressures on gold prices. 1200 ------------------- The UK completed its fifth sale of 25 tons in March at $285.25/toz, slightly below prevailing spot 600 ---- prices, with the auction 3 times over-subscribed. This Sooth Afri.a ended the first 125 tons of its planned sales of 415 0 , . ......... ....... tons over the medium-term. The UK also announced 1970 1980 1990 2000 that it will sell a further 150 tons in a series of six bi- monthly auctions, starting in May. 700 Demand in Main Countries (tons) The Netherlands' central bank rapidlv com- pleted sale of 100 tons in February, less than three /\Developing -- months after announcing its plan on December 6, 1999, to sell 300 tons over the next five years, with the first tranche to be sold by September 2000. The 400 -------------- Dutch will be free this fall to begin the next leg of Developcd their program to sell another 200 tons before Sep- 250 ------- tember 2004. Switzerland's large, planned sale of 1300 tons 100 I I * l could begin in the second quarter, but details on the 4Q96 4Q97 4Q98 4Q99 method and scheduling have not yet been revealed. Annual Prices ($/toz) Despite efforts by some gold producers to 1000 reduce hedging activities, it will remain an essential C115tin (19) Forecast tool for producers to thrive in an environment of 750 - ------------------------- volatile and relatively low prices. In fact, recently there has been fresh producer selling in Australia spurred by a weaker Australian dollar. Prices will remain under downward pressure 2 - v as supplies from all sources will be more than ad- Current equate to meet demand. Movements above $300/ ! u I......... toz will result in reduced demand from price-sensi- 1970 1980 1990 2000 2010 tive consumers, and provide greater incentives for sell forwardand for cental banks toSource: Platts lMetals WDeek, WI3BMS, World Gold O.ouncil, and producers to sell forward and for central banks to World Bank forecasts. mobilize reserves. 70 GLOBAL COMMODITY MAlRKETS GOLD MINE PRODUCTION (tons) CONSUMPTION IN MAIN MARKETS (tons) 1996 1997 1998 1999 1996 1997 1998 1999 S. Afrca, Rep. 494.6 492.5 473.8 443.1 India 507.8 736.7 815.0 838.8 US 326.2 362.3 366.0 339.0 US 331.7 362.0 428.4 459.7 Australia 289.5 311.0 309.3 301.7 China 210.7 213.8 191.6 205.0 China 120.6 149.6 158.2 168.0 Saudi Arabia 184.9 199.0 208.4 199.4 Canada 166.4 171.4 165.6 159.0 Turkey 153.0 202.0 172.0 139.0 Indonesia 83.6 90.0 124.0 134.1 Indonesia 129.0 92.5 -40.0 136.0 Peru 65.1 74.3 93.8 125.0 Egypt 75.7 97.6 104.4 124.8 Russian Fed. 119.9 123.9 113.1 113.1 Japan 152.2 107.1 110.4 121.8 Uzbekistan 71.0 82.0 82.0 82.0 Pakistan 53.7 81.8 98.2 121.8 Brazil 60.0 58.5 65.0 65.0 Korea, Rep. 125.5 114.4 -162.5 118.5 Ghana 49.3 54.7 63.1 63.2 Taiwan, China 123.3 142.1 91.2 109.7 PNG 51.6 48.5 60.3 61.1 Italy 105.3 110.8 112.2 94.7 Chile 51.8 47.8 43.8 45.6 UAE 52.6 71.6 79.4 79.7 Zimbabwe 24.7 24.3 25.2 27.4 Mexico 41.0 49.0 55.0 69.6 Mexico 23.1 26.4 25.4 22.5 UK 47.1 58.8 66.8 62.2 Kazakhstan 10.2 9.7 18.0 22.5 France 47.5 49.4 59.4 60.0 Kyrgyzstan 4.1 15.6 20.1 18.1 Germany 73.1 74.0 70.2 57.5 Colombia 21.5 16.2 14.8 18.0 Brazil 59.0 58.0 64.0 57.0 Guyana 12.0 13.6 14.6 13.3 Vietnam 41.0 45.0 44.0 53.0 Bolivia 12.6 13.3 14.4 11.1 Thailand 106.0 14.0 19.0 48.0 Mongolia 4.9 8.5 7.3 11.0 Kuwait 34.7 35.4 33.0 31.6 Japan 8.6 8.4 8.6 9.4 HK, China 40.4 51.0 31.8 28.7 New Zealand 11.5 11.4 7.7 7.7 Malaysia 33.6 30.1 14.4 17.5 Philippines 8.1 11.2 8.7 7.1 Oman 16.5 17.8 15.3 16.1 Venezuela 11.7 22.3 6.8 5.5 Singapore 20.0 22.4 14.1 11.0 World 2,155.8 2,303.3 2,335.5 2,351.8 World 2,779.5 3,053.6 2,712.1 3,278.4 Source: WBMS Source: WBMS GLOBAL SUMMARY Actual - % p.a.- World Balance (tons) 1991 1992 1993 1994 1995 1996 1997 1998 1991-98 Jewelry 2,358 2,760 2,553 2,618 2,791 2,850 3,342 3,145 4.2 Other Fabrication 518 446 488 457 503 486 563 564 1.2 Bar Hoarding 252 282 162 231 306 182 323 155 -6.7 Other 30 239 6 260 n.a. Total Demand 3,128 3,518 3,442 3,305 3,606 3,518 4,228 4,123 4.0 Mine Production 2,159 2,234 2,287 2,279 2,274 2,357 2,480 2,555 2.4 Net Official Sales 111 622 464 81 173 275 376 412 20.6 Old Gold Scrap 482 488 576 617 625 641 629 1,098 12.5 Net Hedging 66 174 116 163 535 125 472 58 -1.8 Other 310 173 119 271 n.a. Total Supply 3,128 3,518 3,442 3,305 3,606 3,518 4,228 4,123 4.0 Actual Forecast Price ($/toz) 1996 1997 1998 1999 2000 2001 2002 2005 2010 Current 388 331 294 279 285 280 275 275 300 Constant 1990 388 305 282 269 268 257 246 230 222 Source: Gold Fields Minerals Services and LME data, and Word Bank forecasts. april 2000 71 METALS AND MINERALS Iron Ore and Steel Monthly Prices (0/dmtu) Iron ore prices rose 4.4% for FY2000 34 reflecting improved profitability of the steel industry Steelprices are expected to 32 _________________________________ continue rising in the coming months due to Iron Ore Contract strong growth in demand. 30 ----------- Iron ore contract prices rose 4.3% for the cur- rent fiscal year, with the price to Europe of Carajas 28 ---------------------- fines - the reference grade for Brazil's Companhia Vale do Rio Doce (CVRD) - set at 28.79 cents per 26 ............ dry metric ton unit, f.o.b. Ponta da Madeira. Sinmlar Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 price increases were achieved for producers in other Iron Ore (million tons) main markets reflecting improved profitability in the 1200 steel industry. The upturn in iron ore prices, along with the recent bout of aggressive cost cutting, means 900 - that the ore industry is well positioned to expand in- Production vestment and revisit projects that were suspended 600 ________________________________ during the slump in prices. >b - Steel prices increased marginally in the first quar- 300 ter, although products under anti-dumping sanctions, Exports e.g., cold- and hot-rolled coiled sheet, recorded gains 0 . . . .. . I of some 3%. Prices for wire rod and rebar, on the 1970 1980 1990 2000 other hand, were down more than 4% because of Steel (milion tons) excess supplies. 1000 The US International Trade Commission has Crude Steel Production rejected trade complaints against cold-rolled coil from 750- six countries -Argentina, Brazil,Japan, Russia South Africa, and Thailand - and US imports are likely to 500 --------------------------------- rise again and slow the pace of price increases. On February 11, President Clinton announced restrictions 250 --- ------ on wire rod imports (excluding Canada, Mexico and - some other Latin America producers), which should o Semi and f inshed E.xports support prices for wire rod in the near-term, and 1975 1980 1985 1990 1995 2000 indirectly rebar. Annual Prices Qt/dmtu) Steel demand remains strong in North America 60 and is firming in Europe, while the Asian recovery in CoiTssanl L1990) Forecast the auto and manufacturing sectors continues - the 4------ exception being Japan. World steel production was a up 12.2% for the first two months of 2000 accord- ing to the IISI, with large gains in all main regions. It is estimated that the rate of operating capacity in the 15 industry is a relatively high 93%.0 Prices for steel products are likely to increase in Current Iron Ore the coming months, mainly due to the increase in glo- o0 bal demand. The gains for individual products will 1 not be uniform, however, as developments on trade Soure: CvRD, IISI, and World Bank forecasts. complaints will continue to affect supply balances in particular regions. 72 GLOBAL COMMODITY MARKETS IRON ORE AND STEEL IRON ORE PRODUCTION (000 tons) CRUDE STEEL PRODUCTION (000 tons) 1995 1996 1997 1998 1996 1997 1998 1999 China 261,919 252,283 268,623 222,236 China 101,237 108,911 114,135 123,310 Brazil 178,380 179,870 187,950 183,050 US 95,535 98,486 97,295 96,051 Australia 139,067 147,200 157,767 153,459 Japan 98,801 104,545 93,548 94,178 Russian Fed. 78,348 72,136 70,870 72,340 Russian Fed. 49,253 48,502 41,786 49,759 India 62,000 67,264 69,400 71,400 Germany 39,793 45,007 44,046 42,056 US 62,645 62,132 62,737 62,590 Korea D. Rep. 38,903 42,554 39,896 41,040 Ukraine 50,741 47,590 52,990 50,760 Ukraine 22,332 25,629 23,461 26,757 Canada 37,629 37,042 38,928 38,908 Brazil 25,237 26,153 25,760 24,996 S. Afrca, Rep. 32,650 30,829 33,250 32,948 Italy 23,910 25,842 25,798 24,964 Sweden 21,663 21,288 21,893 20,930 India 23,753 24,415 23,480 24,269 Venezuela 19,452 18,720 18,660 17,230 France 17,633 19,767 20,126 20,211 Mexico 12,910 14,202 13,244 14,500 UK 17,992 18,501 17,287 16,634 Iran, Islamic R. 9,080 9,850 12,750 12,750 Canada 14,735 15,553 15,930 16,300 Mauritania 11,330 11,400 11,700 11,402 Taiwan, China 12,350 15,994 16,903 15,376 Kazakhstan 14,900 12,980 12,627 8,693 Mexico 13,172 14,218 14,213 15,299 Chile 7,950 8,480 8,090 8,280 Spain 12,154 13,683 14,821 14,610 Turkey 5,510 5,150 8,065 7,383 Turkey 13,624 14,475 14,144 14,359 Peru 5,975 4,468 4,746 4,905 Belgium 10,818 10,739 11,42? 10,972 Egypt 2,099 2,700 3,000 3,000 Poland 10,432 11,585 9,915 8,770 New Zealand 2,570 2,600 2,500 2,700 Australia 8,415 8,831 8,941 8,179 Other 21,695 13,726 10,395 8,243 Other 201,165 214,363 201,117 205,877 World 1,038,51 1,021,91 1,070,185 1,007,707 World 750,007 798,842 759,894 770,657 Source: IISI Source: IISI EXPORTS OF SEMI-FINISHED AND FINISHED EXPORTS OF IRON ORE (000 tons) STEEL(000 tons) 1995 1996 1997 1998 1995 1996 1997 1998 Brazil 131,358 129,740 140,419 143,200 Japan 22,129 19,262 22,892 24,996 Australia 130,223 128,606 144,914 142,134 Russian Fed. 27,371 26,994 26,120 24,831 India 32,332 31,700 31,100 32,200 Germany 20,324 20,437 23,663 22,400 Canada 28,833 27,920 32,340 30,179 Bel.-Lux. 14,190 14,673 16,459 17,647 S. Afrca Rep. 21,847 20,091 20,730 22,093 Korea Rep. 9,795 10,438 11,739 17,476 Ukraine 21,015 20,570 20,083 17,702 Ukraine 11,653 12,142 16,147 15,948 Sweden 17,083 16,071 18,282 15,954 France 12,796 13,124 14,884 15,056 Russian Fed. 20,218 17,126 11,773 14,000 Italy 10,173 10,922 10,695 10,192 Mauritania 11,514 11,158 11,700 11,400 Brazil 9,655 10,257 9,163 8,756 Venezuela 10,609 9,580 9,322 8,600 UK 8,896 9,336 9,371 8,332 Kazakhstan 1,180 3,747 9,270 7,354 Netherands 6,317 6,481 6,819 6,752 Chile 6,114 6,911 7,052 6,700 Taiwan, China 3,027 3,765 5,119 6,022 Peru 6,008 4,029 3,712 4,800 Mexico 5,930 5,352 5,497 5,961 Philippines 4,744 4,546 4,500 4,500 Turkey 6,211 6,697 7,227 5,723 US 5,270 6,256 6,336 3,002 US 6,623 4,641 5,568 5,597 Bahrain 3,200 2,800 3,000 3,000 Spain 4,947 5,486 5,556 5,280 New Zealand 1,316 1,382 1,300 1,300 Canada 4,716 4,929 4,787 5,262 Korea, D. Rep. 300 200 200 200 China 10,745 7,131 8,765 5,206 Slovak Rep. 80 95 81 75 Austria 3,762 3,128 3,724 4,838 Spain 1,552 975 43 55 Sweden 3,217 3,599 3,975 3,832 Other 4,059 2,604 1,102 304 Other 46,014 48,232 49,490 50,703 World 458,855 446,107 477,259 468,752 World 248,491 247,026 267,660 270,810 Source: IISI Source: IISI april 2000 73 APPENDIX ... .. .. .. . . . ..... .. . . : . i . . . ; .. . .. . . ..... . ... .. .. .. .. ; . . . . . .. .. r . ... ... . . . ...... .. .. ......... ............. . . . . . .; , . .. ... . . . . .. ............. . ..... ... ..... .... .. . .. . . . . . ... ... ........ . ... .. : .. .. . ... .. .. ... ... .D . .. . . . . ... . , . . . ; . , ! ... ..... . . . g .. .. i '; . : ,,, , .: . .) ' .: ;, ' . .. : . . : ... .. . .. .. . .. ,. f '. ' '; i " .. , .. _ .... . . . .. . .. : .. . ,' ,,,,: .. ' . : E ' ' ' . ' ' .. . . . . ... .. .. . .. : '' ' ". ' . .... .. z . 1. . . : ', ' ' ;': ;' ' i,,,'.:,,, ........ . .. ' ': E ' . ...... : ' "' ' .,' ' ' A-PPENDIX -Annual Averages - Quarterly Averages -Monthly Averages- Jan-Dec Jan-Dec Jan-Mar Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Jan Feb Mar Commodity Unit 1998 1999 2000 1999 1999 1999 1999 2000 2000 2000 2000 Coal, Australia $/mt 29.23 25.89 25.10 26.10 26.10 26.10 25.27 25.10 25.10 25.10 2.10 Coal, US $/mt 34.38 33.17 33.00 33.50 33.17 33.00 33.00 33.00 33.00 33.00 33.00 Crude oil, avg. spot* $/bbl 13.07 18.07 26.67 11.79 16.10 20.65 23.74 26.67 25.31 27.22 27.49 Crude oil, Brent* $/bbl 12.72 17.81 26.85 11.24 15.40 20.54 24.04 26.85 25.38 27.70 27.47 Crude oil, Dubai* $/bbl 12.12 17.16 24.35 11.07 15.26 19.69 22.65 24.35 23.28 24.68 25.08 Crude oil, W. TX Intl* S/bbl 14.35 19.24 28.82 13.05 17.66 21.73 24.52 28.82 27.27 29.28 29.92 Natural gas, Europe $/mmbtu 2.42 2.13 3.44 1.99 1.89 2.09 2.55 3.44 3.36 3.46 3.51 Natural gas, US $/mmbtu 2.09 2.27 2.62 ~~~~~~1.81 2.23 2.55 2.48 2.62 2.42 2.65 2.79 Agriculture Beverages Cocoa** o/kg 167.6 113.5 90.0 139.4 113.6 105.7 95.4 90.0 91.9 85.7 92.6 Coffee, arabica^^ ¢/kg 298.1 229.1 231.7 238.0 235.5 198.8 244.0 231.7 245.0 228.1 222.1 Coffee, robusta^^ ¢/kg 182.3 148.9 109.0 172.7 149.1 135.4 138.4 109.0 117.2 107.7 102.0 Tea, 3-auchon avg,** ¢/kg 204.6 183.9 180.5 167.6 181.5 190.8 195.8 180.5 185.5 181.2 174.8 Tea, Calcutta auctions^* ¢/kg 216.5 206.8 158.2 162.3 223.4 224.9 216.6 158.2 186.1 152.4 136.2 Tea, Colombo auctions^^ c!kg 207.5 164.9 181.9 160.3 145.9 170.7 182.9 181.9 182.7 180.8 182.1 Tea, Mombasa aucthons^^ ¢/kg 189.9 180.0 201.4 180.3 175.1 176.9 187.8 201.4 187.6 210.5 206.2 Food Fats and Oils: Coconut oil** $/mt 657.9 737.1 599.0 736.0 832.3 681.3 698.7 599.0 654.0 591.0 552.0 Copra $/mt 411.1 461.5 411.3 457.7 521.3 433.7 433.3 411.3 420.0 411.0 403.0 Groundnut oil** $/mt 909.4 787.7 T73.0 808.0 755.7 781.7 805.3 773.0 789.0 774.0 756.0 Palm oil** $/mt 671.1 436.0 343.3 563.3 458.7 353.7 368.3 343.3 348.0 332.0 350.0 Palmkernel oil $/mt 686.7 694.1 588.0 704.7 729.0 656.7 686.0 588.0 628.0 580.0 556.0 Soybean meal** $/mnt 170.3 152.2 182.3 145.7 140.0 152.3 170.7 182.3 180.0 187.0 180.0 Soybean oil** $/mt 625.9 427.3 363.3 492.3 426.7 406.3 384.0 363.3 371.0 357.0 362.0 Soybeans** $/mt 243.3 201.7 214.3 210.3 200.0 196.3 200.0 214.3 208.0 214.0 221.0 Grains Maize-t $/mt 102.0 90.2 94.5 95.9 93.4 85.4 86.1 94.5 93.3 95.2 95.1 Rice, Thai, 5%** $/mt 304.2 248.4 236.1 278.7 244.5 244.3 226.3 236.1 241.4 241.0 225.8 Rice, Thai, 25% $/mt 259.9 216.3 196.4 239.6 211.6 217.9 196.1 196.4 201.6 199.0 188.7 Rice, Thai, 35% $/mt 249.7 210.5 188.7 232.9 205.9 212.7 190.6 188.7 194.4 191.0 180.8 Rice,Thai, A1.Special $/mt 213.0 192.6 155.8 214. 2 189.5 201.1 165.7 155.8 158.2 156.7 152.5 Sorghum** $/mt 98.0 84.4 90.3 90.9 87.6 79.5 79.6 90.3 89.3 89.9 91.7 Wheat, Canada $/mt 162.9 151.3 149.2 160.7 148.2 148.2 148.0 149.2 150.7 150.4 146.5 Wheat, US, HRW-* $/mt 126.1 112. 106.5 119.9 112.8 109.2 106.4 106.5 105.8 107.9 105.7 Wheat, US, SRW $/mt 111.5 96.3 98.6 99.5 96.4 93.4 95.9 98.6 98.6 100.1 97.2 Other Food Bananas - EU $/mt 1,005.0 850.4 889.8 1092.8 824.1 745.8 739.0 889.8 885.5 3 19.6 864.4 Bananas - US** $/mt 489.5 373.8 514.4 461.1 346.2 351.6 336.4 514.4 482.3 !,78.7 482.3 Beef** ¢/kg 172.6 184.3 196.8 177.1 175.6 192.5 192.1 196.8 194.5 196.5 199.3 Fishmeal $/mt 661.9 392.5 405.7 453.3 343.3 369.3 404.0 405.7 416.0 409.0 392.0 Lamb ¢/kg 275.0 261.0 270.8 247.0 263.2 267.1 266.7 270.8 272.7 269.8 270.0 Oranges-^ $/mt 442.4 430.8 226.1 420.3 458.6 474.8 369.6 226.1 245.3 2129.3 203.8 Shrimp ¢/kg 1,579 1,461 1,493 1,413 1,470 1,485 1,473 1,493 n. a. 1,488 1,501 Sugar, EU, domestic^ ¢/kg 59.75 59.17 58.77 59.72 58.78 58.55 59.65 58.77 60.01 58.51 57.78 Sugar, US, domestic- ¢/kg 48.64 46.60 39.06 49.45 49.88 47.01 40.05 39.06 39.00 r'7.65 40.54 Sugar, world** ¢/kg 19.67 13.81 11.80 15.40 12.63 13.06 14.14 11.80 12.41 11.73 11.27 Raw Materials Timber: Logs, Cameroon $/cum 286.4 269.3 293.5 282.3 255.3 247.2 292.4 293.5 301.3 292.3 286.7 Logs, Malaysia^^ $/cum 162.4 187.1 189.4 175.3 178.4 195.9 198.8 189.4 193.1 184.1 190.9 Plywood ¢/sheet 376.1 440.6 446.9 426.4 429.9 440.3 465.6 446.9 456.4 439.1 445.0 Sawnwood, Cameroon $/cum 526.3 455.2 501.5 461.5 424.4 441.8 493.1 501.5 509.9 494.7 soo.o Sawnwood, Malaysia^^ $/cum 484.2 600.8 641.0 544.3 582.8 632.9 643.4 641.0 643.4 6,13.4 636.4 Woodpulp $/mt 508.4 507.8 616.6 ~~~~~~~~~447.6 491.5 521.2 570.8 615.7 611.5 6-16.0 618.4 76 GLOBAL COMMODITY fMARKETS APPENDIX Annual Averages- Quarterly Averages - Monthly Averages- Jan-Dec Jan-Dec Jan-Mar Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Jan Feb Mar Commodity Unit 1998 1999 2000 1999 1999 1999 1999 2000 2000 2000 2000 ; ' ' ' ' ' ? ' ' .? U ?. .. . ' -;??°.( * - ? , ,, So X ? lia tt o t to' >° ? o ? .< , ° ; , ? *o t. Agriculture (continued) Other Raw Materials CottonW ¢/kg 144.5 117.1 116.5 123.9 129.4 113.8 101.3 116.5 104.6 118.5 126.3 Cotton, Memphis ¢/kg 165.8 123.0 136.0 n.q. n.q. n.q. 120.5 136.0 129.4 134.3 144.3 Jute $/mt 258.0 276.3 299.3 250.0 260.0 295.0 300.3 299.3 300.0 300.0 298.0 Rubber, Malaysia-* ¢/kg 72.2 62.9 70.1 68.0 59.7 55.6 68.1 70.1 64.9 74.2 71.1 Rubber, US ¢/kg 89.5 80.9 85.8 83.7 77.5 74.6 87.7 85.8 84.1 89.0 84.2 Rubber, Singapore ¢/kg 70.9 62.0 68.8 65.5 59.9 55.9 66.9 68.8 64.5 73.7 68.2 Sisal $/mt 820.8 691.5 558.3 779.2 731.7 647.5 607.7 558.3 550.0 550.0 575.0 Wool ¢/kg 429.0 398.8 402.6 368.0 400.3 414.2 412.5 402.6 410.4 400.3 397.2 Fertilizers DAP $/mt 203.4 177.8 149.5 199.3 189.7 173.9 148.2 149.5 149.4 150.1 148.9 Phosphate rock** $/mt 43.0 44.0 44.0 44.0 44.0 44.0 44.0 44.0 44.0 44.0 44.0 Potassium chloride $/mt 116.9 121.6 122.5 119.1 122.5 122.5 122.5 122.5 122.5 122.5 122.5 TSP- $/mt 173.1 154.5 138.0 164.1 162.6 150.9 140.4 138.0 138.0 138.0 138.0 Urea, E. Europe, bagged $/mt 103.1 77.8 96.5 79.5 75.9 77.4 78.2 96.5 90.0 102.3 97.3 Urea, E. Europe. bulk $/mt 83.1 66.4 85.2 67.6 64.6 66.1 67.3 85.2 79.8 91.4 84.4 Metals and Minerals Aluminum't $/mt 1,357 1,361 1,643 1,196 1,306 1,443 1,501 1,643 1,680 1,670 1,577 Copper-* $/mt 1,654 1,573 1,795 1,407 1,467 1,679 1,739 1,795 1,844 1,801 1,739 Gold $/toz 294.2 278.8 290.2 286.8 273.5 259.2 295.7 290.2 284.3 299.9 286.4 Iron ore ¢/dmtu 31.00 27.59 28.79 27.59 27.59 27.59 27.59 28.79 28.79 28.79 28.79 Lead** ¢/kg 52.9 50.3 45.5 50.5 51.9 50.2 48.5 45.5 47.2 45.2 44.1 Nickel** $/mt 4,630 6,011 9,414 4,635 5,232 6,392 7,785 9,414 8,310 9,653 10,280 Silver ¢/toz 553.4 525.0 521.1 530.2 515.6 526.7 527.3 521.1 523.5 529.7 510.2 Steel products (8) index*** 1990=100 74.9 68.4 73.0 64.1 66.4 70.4 72.6 73.0 69.9 73.7 75.5 Steel-cold rolled coilsheet $/mt 370.8 340.4 386.7 306.7 328.3 350.0 376.7 386.7 370.0 390.0 400.0 Steel-hot rolled coilsheet $/mt 279.2 243.3 290.0 206.7 223.3 263.3 280.0 290.0 280.0 290.0 300.0 Steel, rebar S/mt 257.5 234.2 226.7 230.0 230.0 240.0 236.7 226.7 220.0 230.0 230.0 Steel, wire rod $/mt 332.1 290.0 273.3 293.3 290.0 290.0 286.7 273.3 260.0 280.0 280.0 Tin- ¢/kg 554.0 540.4 567.6 524.6 543.6 526.8 566.5 567.6 592.8 564.2 545.8 Zinc- ¢/kg 102.5 107.6 113.0 99.3 102.0 113.2 116.0 113.0 117.9 109.5 111.6 -V. p. Petroleum 57.1 79.0 116.6 51.5 70.4 90.3 103.8 116.6 110.6 119.0 120.2 Non-Energy Commodities 99.1 88.0 90.2 89.5 87.3 86.0 89.2 90.2 90.7 90.6 89.2 Agriculture 107.8 92.8 91.6 97.5 92.8 88.7 92.1 91.6 92.0 92.0 90.7 Beverages 140.6 107.7 100.2 116.0 109.3 97.3 108.1 100.2 105.1 98.3 97.0 Food 104.9 87.5 85.6 95.1 87.1 83.8 84.2 85.6 85.9 86.5 84.2 Fats and Oils 132.8 105.0 101.1 115.6 106.0 96.7 101.9 101.1 101.7 100.8 100.7 Grains 101.3 86.4 84.5 94.3 86.8 83.8 80.6 84.5 84.9 85.7 83.0 Other Food 84.1 73.9 73.4 78.7 71.9 73.2 71.8 73.4 73.5 75.3 71.4 Raw Materials 87.31 88.53 92.94 86.9 880 88.6 90.6 92.9 90.2 94.2 94.3 Timber 90.9 111.8 118.5 101.7 108.2 117.7 119.6 118.5 119.2 118.5 117.9 Other Raw Materials 84.8 72.7 75.5 76.8 74.2 68.8 70.8 75.5 70.5 77.7 78.3 Fertlizers 122.1 114.1 106.1 118.7 118.0 112.3 107.3 106.1 106.1 106.1 106.1 Metals and Minerals 75.5 73.7 85.3 67.2 70.7 76.8 80.2 85.3 86.0 85.9 84.0 *Included in the petroleum index. -included in the non-energy index. ***Steel not included in the non-energy index. $ = U.S. dollar ¢ = U.S. cent bbl = barrel cum = cubic meter dmtu = dry metric ton kg = kilogram mmbtu = million Bribsh thermal units mt = metnc ton toz = troy ounce april 2000 77 APPENDIX S,Y ~~~~~~~~~~~~~~~~~~~~~~.......... 0 i Actual Projections Commodity Unit 1970 1980 1990 1998 1999 2000 2001 2002 2005 2010 Coal, US $/mt n.a. 43.10 41.67 34.38 33.17 33.00 33.50 34.00 35.50 38.00 Crude oil, avg. spot $/bbl 1 21 36,87 2288 13.07 18.07 24.00 21.00 19.00 18.00 19.00 Natural gas, Europe S/mmbtu n a. 3.40 2.55 2.42 2.13 3.40 3.25 2.90 2.70 2.75 Natural gas, US $/mmbtu 0.17 1.55 1.70 2.09 2.27 2.80 2.90 2.80 2.75 3.00 Agriculture Beverages Cocoa ¢/kg 67.5 260.4 126.7 167.6 113.5 95.0 105.0 120.0 150.0 170.0 Coffee, other milds c/kg 114.7 346.6 197.2 298.1 229.1 220.5 220.5 234.8 254.0 265.0 Coffee, robusta 0/kg 91.4 324.3 118.2 182.3 148.9 110.2 114.6 125.7 163.1 187.4 Tea, 3-aucton average ¢/kg 83.5 165 9 205.8 204.6 183.9 186.0 187.0 188.5 195.0 210.0 Food Fats and Oils Coconut oil $/mt 397.2 673.8 336.5 657.9 737.1 650.0 625.0 620.0 620.0 650.0 Copra $/mt 224.8 452.7 230.7 411.1 461.5 410.0 425.0 435.0 460.0 483.0 Groundnut oil $/mt 378.6 858.8 963.7 909 787.7 750.0 800.0 800.0 820.0 850.0 Palm oil $/mt 260.1 583.7 289.8 671.1 436.0 350.0 350.0 365.0 425.0 460.0 Soybean meal $/mt 102.6 262.4 200.2 170.3 152.2 185.0 195.0 205.0 215.0 226.0 Soybean oil $/mt 286.3 597.6 447.3 625.9 427.3 405.0 410.0 430.0 460.0 525.0 Soybeans $/mt 116.9 296.2 246.8 243.3 201.67 220.0 230.0 240.0 250.0 275.0 Grains Maize $/mt 58.4 125.3 109.3 102.0 90.2 100.0 110,0 115.0 125.0 130.0 Rice, Thai, 5% $/mt 126.3 410.7 270.9 304.2 248.4 250.0 260.0 270.0 315.0 345.0 Sorghum S/mt 51.8 128.9 103.9 98.0 84.4 95.0 105.0 110.0 120.0 125.0 Wheat, US, HRW $/mt 54.9 172.7 135.5 1261 112.0 120.0 130.0 140.0 160.0 170.0 Other Food Bananas, US $/mt 166.1 377.3 540.9 489.5 373.2 468.5 496.0 518.1 556.7 567.7 Beef ¢/kg 130.4 276.0 256.3 172.6 184.3 198.4 202.8 202.8 209.4 220.0 Oranges $/mt 168.0 400.2 531.1 442.4 430.8 250.0 400.0 500.0 565.0 600.0 Shrmp, Mexican C/kg n.a. 1.152 1,069 1,579 1,461 1,500 1,510 1,530 1,550 1,590 Sugar, word c/kg 8.2 63.16 27.67 19.67 13.81 13.45 14.20 14.50 20.00 24.00 Raw Materials Timber Logs, Cameroon $/cum 43.0 251.7 343.5 286.4 269.3 295.0 310.0 320.0 340.0 420.0 Logs, Malaysia $/cum 43.1 195.5 177.2 162.4 187.1 210.0 225.0 235.0 255.0 290.0 Sawnwood, Malyasia $/cum 175.0 396.0 533.0 484.2 600.8 640.0 660.0 680.0 755.0 900.0 Other Raw Materials Cotton ¢/kg 67.6 206.2 181.9 144.5 117.1 123.5 130.1 136.7 158.7 180.8 Rubber, RSS1, Malaysia c/kg 40.7 142.5 86.5 72.2 62.9 70.6 75.0 79.4 88.2 99.2 Tobacco $/mt 1,076 2,276 3,392 3,342 3,026 3,100 3,100 3,100 3,250 3,300 Fertilizers DAP S/mt 54.0 222.2 171.4 203.4 177.8 165.0 175.0 180.0 195.0 205.0 Phosphate rock $/mt 11.00 46.71 40.50 43.00 44.00 44.00 44.00 44.00 44.00 46.00 Potassium chlonde $/mt 32.0 115.7 98.1 116.9 121.6 122.5 124.0 124.0 125.0 127.0 TSP $/mt 43.0 180.3 131.8 173.1 154.5 142.0 150.0 155.0 160.0 170.0 Urea, E. Europe, bagged $/mt 48.0 222.1 130.7 103.1 77.8 90.0 100.0 110.0 120.0 140.0 Metals and Minerals Aluminum $/mt 556 1,456 1,639 1,357 1,361 1,600 1,600 1,650 1,800 1,900 Copper $/mt 1,416 2,182 2,661 1,654 1,573 1,800 1,900 2,000 2,200 2,400 Gold $/toz 36.0 608.0 383.5 294.2 278.8 285.0 280.0 275.0 275.0 300.0 Iron ore, Carajas ¢/dmtu 9.84 28.09 32.50 31.00 27.59 29.00 29.50 30.25 32.00 33.00 Lead c/kg 30.3 90.6 81.1 52.9 50.3 47.0 52.5 55.0 60.0 64.0 Nickel $/mt 2,846 6,519 8,864 4,630 6,011 9,000 8,000 7,000 6,000 5,800 Silver 0/toz 177.0 2,064 482.0 553.4 525.0 520.0 515.0 510.0 525.0 .550.0 Tin c/kg 367.3 1,677 608.5 554.0 540.4 560.0 560.0 570.0 590.0 610.0 Znc c kg 29.6 76.1 151.4 102.5 107.6 115.0 116.0 117.0 120.0 125.0 n.a. = not available Note: Projectons as of May 4, 2000. Source: World Bank, Development Economics, Development Prospects Group 78 GLOBAL COMMODITY MARKETS APPENDIX Commodity Unit 2000 2001 2002 2005 s¢,a os?t t ° ; t? u ?t ? -'- - ? ?~~. '? 51? :5 ?l? fi?$ 1 Coal, US $/mt 28.25 - 37.75 25.50 - 41.50 24.00 - 44.00 22.00 - 49.00 Crude oil, avg. spot $/bbl 20.00 - 28.00 15.00 - 27.00 12.50 - 25.50 10.75 - 25.25 Natural gas, Europe $/mmbtu 2.85 - 3.95 2.45 - 4.05 1.95 - 3.85 1.60 - 3.80 Natural gas, US $/mmbtu 2.35 - 3.25 2.20 - 3.60 2.00 - 3.60 1.65 - 3.85 ;-T,,?. Agriculture Beverages Cocoa c/kg 83 - 107 83 - 127 82 - 159 82 - 219 Coffee, other milds ¢/kg 189 - 253 169 - 272 153 - 317 134 373 Coffee, robusta c/kg 95 - 127 89 - 142 85 - 168 99 - 229 Tea, 3-aucton average c/kg 157 - 209 149 - 225 143 - 238 137 - 265 Food Fats and Oils Coconut oil S/mt 572 - 794 519 - 793 475 - 892 452 - 1,050 Copra $/mt 359 - 462 349 - 502 325 - 547 296 - 513 Groundnut oil S/mt 655 - 829 628 - 937 621 - 1,009 583 - 1,138 Palm oil $/mt 306 - 396 281 - 438 287 500 308 - 678 Soybean meal $/mt 159 218 152 - 238 148 - 275 151 - 312 Soybean oi. $/mt 355 - 455 344 - 511 345 - 588 347 - 721 Soybeans $/mt 189 - 260 179 - 281 173 - 322 163 - 363 Grains Maize $/mt 86 - 116 86 - 136 85 - 145 81 - 179 Rice, Thai, 5% $/mt 215 - 290 198 - 333 194 - 356 205 - 457 Sorghum $/mt 81 - 110 80 - 130 74 - 139 78 - 172 Wheat, US, HRW $/mt 103 - 139 101 - 161 104 - 176 104 - 229 Other Food Bananas, US $/mt 422 - 517 416 577 427 - 610 439 - 675 Beef ¢/kg 169 - 228 158 - 247 146 - 272 147 - 304 Oranges $Smt 213 - 313 288 512 350 - 650 379 - 752 Shnmp, Mexican ¢/kg 1,275 - 1,725 1,178 - 1,842 1,102 - 2,020 1,008 - 2,201 Sugar, world c/kg 11.8 - 15.1 11.1 - 17.3 10.2 - 19.6 13.4 - 30.0 Raw Materials Timber Logs, Cameroon $/cum 251 - 342 233 - 391 208 - 432 187 - 493 Logs, Malaysia $/cum 179 - 244 173 - 281 165 - 306 153 - 357 Sawnwood, Malyasia $/cum 544 - 755 508 825 490 - 857 468 - 1,027 oter Raw Materials Cotton p/kg 107 - 138 110 - 151 102 - 171 102 - 214 Rubber, RSS1. Malaysia p/kg 63 - 79 61 - 89 62 - 96 61 - 116 Tobacco $/mt 2,728 3,472 2,480 - 3,720 2,325 - 3,875 2,178 - 4,323 Fertilizers DAP S/mt 142 - 188 137 - 214 130 234 137 - 273 Phosphate rock $/mt 40 - 48 36 - 52 35 - 53 33 - 55 Potassium chloride $1mt 110 - 135 99 - 149 94 - 156 88 - 169 TSP S/mt 122 - 162 117 - 183 112 - 202 112 - 224 Urea. E. Europe, bagged S/mt 77 - 107 75 - 125 79 - 147 84 - 174 Metals and Minerals Aluminum $/mt 1,350 - 1,850 1,200 - 2,000 1,100 - 2,200 1,075 - 2,525 Copper $/mt 1,525 - 2,075 1,425 - 2,375 1,330 - 2,670 1,300 - 3,100 Gold $/toz 240 - 330 210 - 350 185 - 365 170 - 385 Iron ore, Carajas ¢/dmtu 25 - 33 23 - 36 23 - 38 22 - 43 Lead ¢/kg 40- 54 40- 66 37- 74 36 -84 Nickel $/mt 7,500 - 10,500 6,000 - 10,000 4,600 - 9,400 3,600 - 8,400 Silver ¢/toz 440 - 600 385 - 645 340 - 680 315 - 735 Tin ¢/kg 475 - 645 420 - 700 380 - 760 355 - 825 Zinc ¢/kg 98 -132 87 -145 78 -156 72 -168 Note: Projectons as ot May 4, 2000. Source: Wodd Bank, Development Economics, Development Prospects Group april 2000 79 APPENDIX M0, ,, Actual Projections Commodity Unit 1970 1980 1990 1998 1999 2000 2001 2002 2005 2010 Coal, US $/mt n.a. 59.88 41.67 33.00 32.03 31.09 30.79 30.46 29.70 28.13 Crude oil, avg. spot $/bbl 4.82 51.22 22.88 12.54 17.45 22.61 19.30 17.02 15.06 14.06 Natural gas. Europe $/mmbtu n.a. 4.72 2.55 2.32 2.06 3.20 2.99 2.60 2.26 2.04 Natural gas, US $/mmbtu 0.68 2.15 1.70 2.00 2.19 2.64 2.67 2.51 2.30 2.22 Agriculture Beverages Cocoa ¢/kg 269.1 361.7 126.7 160.9 109.6 89.5 96.5 107.5 125.5 125.8 Coffee, other milds e/kg 457.2 481.6 197.2 286.1 221.2 207.7 202.6 210.3 212.5 196.2 Coffee, robusta ¢/kg 364.3 450.6 118.2 174.9 143.8 103.8 105.4 112.6 136.5 138.7 Tea, 3-auction average ¢/kg 332.9 230.5 205.8 196.4 177.6 175.2 171.9 168.9 163.2 155.5 Food Fats and Oils Coconut oil $/mt 1583.7 936.1 336.5 631.5 711.8 612.3 574.5 555.4 518.8 481.2 Copra $/mt 896.5 629.0 230.7 394.6 445.6 386.3 390.6 389.7 384.9 357.5 Groundnut oil $/mt 1509.4 1193.0 963.7 872.8 760.6 706.6 735.3 716.7 686.1 629.2 Palm oil $/mt 1036.9 810.9 289.8 644.1 421.0 329.7 321.7 327.0 355.6 340.5 Soybean meal $/mt 409.0 364.6 200.2 163.5 146.9 174.3 179.2 183.6 179.9 167.3 Soybean oil $/mt 1141.7 830.2 447.3 600.8 412.6 381.5 376.8 385.2 384.9 388.6 Soybeans $/mt 466.2 411.5 246.8 233.5 194.7 207.3 211.4 215.0 209.2 203.6 Grains Maize $/mt 232.9 174.0 109.3 97.9 87.1 94.2 101.1 103.0 104.6 96.2 Rice, Thai, 5% $/mt 503.6 570.6 270.9 291.9 239.9 235.5 239.0 241.9 263.6 255.4 Sorghum $/mt 206.5 179.0 103.9 94.1 81.5 89.5 96.5 98.5 100.4 92.5 Wheat, US. HRW S/mt 218.9 240.0 135.5 121.1 108.2 113.1 119.5 125.4 133.9 125.8 Other Food Bananas, US $/mt 662.2 524.1 540.9 469.8 360.4 441.3 455.9 464.1 465.8 420.2 Beef e/kg 520.1 383.4 256.3 165.6 178.0 186.9 186.4 181.7 175.2 162.9 Oranges $/mt 670.0 556.0 531.1 424.6 416.0 235.5 367.7 447.9 472.8 444.2 Shrimp, Mexican ¢/kg n.a. 1,600 1,069 1,515 1,410 1,413 1,388 1,371 1,297 -,177 Sugar, world ¢/kg 32.8 87.8 27.7 18.9 13.3 12.7 13.1 13.0 16.7 17.8 Raw Materials Timber Logs, Cameroon $/cum 171.5 349.7 343.5 274.9 260.0 277.9 284.9 286.7 284.5 .;10.9 Logs, Malaysia $/cum 172.0 271.6 177.2 155.9 180.7 197.8 206.8 210.5 213.4 214.7 Sawnwood, Malyasia $/cum 697.8 550.2 533.0 464.7 580.2 602.9 606.6 609.2 631.8 666.2 Other Raw Materials Cotton ¢/kg 269.7 286.5 181.9 138.7 113.1 116.3 119.6 122.5 132.8 133.8 Rubber, RSS1, Malaysia c/kg 162.4 197.9 86.5 69.3 60.7 66.5 68.9 71.1 73.8 73.4 Tobacco $/mt 4,290 3,162 3,392 3,207 2.922 2,920 2,849 2,777 2,719 2,443 Fertilizers DAP $/mt 215.3 308.7 171.4 195.2 171.7 155.4 160.9 161.3 163.2 151.8 Phosphate rock $/mt 43.9 64.9 40.5 41.3 42.5 41.5 40.4 39.4 36.8 34.1 Potassium chlonde $/mt 127.6 160.8 98.1 112.2 117.5 115.4 114.0 111.1 104.6 94.0 TSP $/mt 171.5 250.4 131.8 166.1 149.2 133.8 137.9 138.9 133.9 125.8 Urea, E. Europe, bagged $/mt 191.4 308.6 130.7 98.9 75.1 84.8 91.9 98.5 100.4 11)3.6 Metals and Minerals Aluminum $/mt 2,217 2,023 1,639 1,303 1,314 1,507 1,471 1,478 1,506 1,406 Copper $/mt 5,645 3,032 2,661 1,588 1,519 1.696 1,746 1,792 1,841 1.777 Gold $/toz 143.5 844.7 383.5 282.3 269.2 268.5 257.4 246.4 230.1 222.1 Iron ore. Carajas ¢/dmtu 39.2 39.0 32.5 29.8 26.6 27.3 27.1 27.1 26.8 24.4 Lead ¢/kg 120.8 125.8 81.1 50.7 48.5 44.3 48.3 49.3 50.2 47.4 Nickel $/mt 11,348 9,056 8,864 4,443 5,805 8,479 7,353 6,271 5,021 5,034 Silver c/toz 705.7 2866.9 482.0 531.2 506.9 489.9 473.4 456.9 439.3 407.1 Tin o/kg 1464.7 2330.5 608.5 531.8 521.8 527.6 514.7 510.6 493.7 451.6 Znc ¢/kg 118.0 105.8 151.4 98.3 103.9 108.3 106.6 104.8 100.4 92.5 n.a. = not available Note: Projections as of May 4, 2000. Source: World Bank, Development Economics, Development Prospects Group 80 GLOBAL COMMODITY MARKETS APPENDIX Commodity Unit 2000 2001 2002 2005 Coal, US $/mt 26.61 - 35.56 23.44 - 38.14 21.50 - 39.42 18.41 - 41.00 Crude oil, avg. spot S/bbl 18.84 - 26.38 13.79 - 24.82 11.20 - 22.84 9.00 - 21.13 Natural gas, Europe $/mmbtu 2.68 - 3.72 2.25 - 3.72 1.75 - 3.45 1.34 - 3.18 Natural gas, US $/mmbtu 2.21 - 3.06 2.02 - 3.31 1.79 - 3.22 1.38 - 3.22 Agriculture Beverages Cocoa ¢/kg 78 - 101 77 - 117 73 - 142 69 - 183 Coffee, other milds ¢/kg 178 - 238 155 - 250 137 - 284 112 - 312 Coffee, robusta ¢/kg 89 - 120 82 - 130 76 - 151 83 - 192 Tea, 3-auction average ¢/kg 148 - 197 137 207 128 - 213 114 - 222 Food Fats and Oils Coconut oil $/mt 539 - 748 477 - 729 425 - 799 379 - 879 Copra $/mt 338 - 435 321 - 461 291 - 490 248 - 513 Groundnut oil $/mt 617 - 781 577 - 861 556 - 903 488 - 952 Palm oil $/mt 288 - 373 259 - 402 257 - 448 257 - 567 Soybean meal $/mt 150 - 206 140 - 219 132 - 246 126 - 261 Soybean oil $/mt 334 - 429 317 - 470 309 - 527 290 - 604 Soybeans $/mt 178 - 245 165 - 258 155 - 288 136 - 303 Grains Maize $1mt 81 - 109 79 - 125 76 - 130 68 - 150 Rice, Thai, 5% $/mt 203 - 273 182 - 306 174 - 319 171 - 382 Sorghum $/mt 76 - 104 73 - 120 66 - 124 65 - 144 Wheat, US, HRW $/mt 97 - 131 93 - 148 93 - 158 87 - 191 Other Food Bananas, US $/mt 397 - 487 382 - 531 383 - 546 367 - 565 Beef ¢/kg 159 - 215 145 - 227 131 - 243 123 - 254 Oranges $Imt 200 - 294 265 - 471 314 - 582 317 - 629 Shdmp, Mexican ¢/kg 1,201 - 1,625 1,083 - 1,693 987 - 1,809 843 - 1,842 Sugar, world ¢/kg 11.1 - 14.2 10.2 - 15.9 9.1 - 17.6 11.2 - 25.1 Raw Materials Timber Logs, Cameroon $/cum 236 - 322 214 - 359 186 - 387 156 - 413 Logs, Malaysia $/cum 168 - 229 159 - 259 147 - 274 128 - 299 Sawnwood, Malyasia $/cum 512 - 711 467 - 758 439 - 768 392 - 859 Other Raw Materials Cotton ¢/kg 100- 130 101- 139 91 -153 86 - 179 Rubber, RSS1, Malaysia s/kg 59 - 74 56 - 82 56 - 86 51 - 97 Tobacco $/mt 2,570 - 3,271 2,279 - 3,419 2,083 - 3.471 1,822 - 3,617 Fertilizers DAP $/mt 134 - 177 125 - 196 116 - 210 114 - 228 Phosphate rock $/mt 37 - 46 33 - 48 32 - 47 28 - 46 Potassium chloride $/mt 104 - 127 91 - 137 84 - 140 73 - 141 TSP $/mt 115- 153 108 -168 100- 181 94 - 187 Urea, E. Europe, bagged $/mt 72 - 100 69 - 115 71 - 132 70 - 146 Metals and Minerals Aluminum $/mt 1,272 - 1,743 1,103 - 1,838 985 - 1,971 900 - 2,113 Copper $/mt 1,437 - 1,955 1,310 - 2,183 1,191 - 2,392 1,088 - 2,594 Gold $/toz 226 - 311 193 - 322 166 - 327 142 - 322 Iron ore, Carajas ¢/dmtu 24 - 31 21 - 33 20 - 34 18 - 36 Lead s/kg 38- 51 36- 60 33- 66 30 -70 Nickel $/mt 7,065 - 9,892 5,515 - 9,191 4,121 - 8,421 3,012 - 7,029 Silver ¢/toz 415 - 565 354 - 593 305 - 609 264 - 615 Tin ¢/kg 447 - 608 386 - 643 340 - 681 297 - 690 Zinc ¢/kg 92 -124 80 -133 70 -140 60 - 141 Note: Projections as of May 4, 2000. Source: World Bank, Development Economics, Development Prospects Group april 2000 81 APPENDIX Actual Projections* 1970 1980 1990 1998 1999 2000 2001 2002 2005 2010 Non-Energy Commodities* 43.8 125.5 100.0 99.1 88.0 91.5 94.3 98.1 107.6 116.6 Agriculture0 ::4 0 45.8 0000;0138.100 0001400.0 107.8A I92. l8 t00 93.8 97.3 102.0 113.4 123.7 Beverages 56.9 181.4 100.0 140.6 107.7 98.5 100.8 108.5 123.1 132.9 Food 46.7 139.3 100.0 104.9 87.5 90.3 94.3 98.0 107.6 113.4 Fats and oils 64.4 148.7 100.0 132.8 105.0 104.3 106.9 111.1 119.3 128.1 Grains 46.7 134.3 100.0 101.3 86.4 91.0 97.4 102.4 116.3 124.4 Other food 32.2 134.3 100.0 84.1 73.9 78.5 82.4 84.7 93.2 95.3 Raw materals 36.4 04.6 100. 0 87 88.5 9 j 4.8 98.6 102.2 113.6 130i3 Timber 31.8 79.0 100.0 90.9 111.8 119.9 124.2 128.2 141.9 168.2 Other Raw Matedals 39.6 122.0 100.0 84.8 72.7 77.7 81.1 84.5 94.3 104.4 VFertilizers 0 t0000000000 0 0 000 ;00000000 0 30.4 12.0 1o00.0 122.1 114.1 108.1 111.9 114.3 116.71 1213 Metals and mfinels 40.4 94 .2 100.0 75.5 73.7 84.4 85.2 87.1 92.7 9.X6 Petroleum 0 00000 ;000000 90002 1.1 $S223.8 0001X00.0 054.8 7&0003 90000000000t8.8 0084.4 00074.40 t0065.8 0061.5 Non-Energy Commodities** 174.7 174.3 100.0 95.1 85.0 86.2 86.7 87.9 90.1 86.3 Agdculture 182.4 191.8 100.0 103.5 89.6 88.4 89.4 91.3 94.90 91.6 Beverages 226.7 252.0 100.0 134.9 104.0 92.8 92.6 97.2 103.0 98.4 Food 186.0 193.4 100.0 100.7 84.5 85.1 86.7 87.8 90.0 84.0 Fats and oils 256.4 206.5 100.0 127.5 101.4 98.3 98.2 99.6 99.8 94.8 Grains 186.1 186.5 100.0 97.2 83.4 85.7 89.5 91.7 97.3 92.1 Other food 128.4 186.6 100.0 80.8 71.3 74.0 75.7 75.9 78.0 70.5 Rawk materials 145.1 1452T100.0 83.8 86.5 89.3 90.6 91.6 95.1 96.4 Tlimber 126.6 109.7 100.0 87.3 107.9 112.9 114.2 114.9 118.8 124.5 Other Raw Materials 157.7 169.5 100.0 81.4 70.2 73.2 74.6 75.7 78.9 77.3 Fertilizers 121.1 179.0 100.0~~~~~~~~~ 172 110.1 101. 102 102.4 97.7 91.3 Metals and'mineras 160.8 130.8 100. 72.4 71.2 795 78.3 78.07 7.5 M73.0 MUV index***** 25.08 71.98 100.00 104.19 103.56 106.15 108.80 111.63 119.51 135.09 % change per annum 4 1112 3.t34 0 .'051 00 2 250 260 2.30 2.48 US GDP deflator 33.59 65.93 100.00 119.19 120.92 122.74 124.95 127.44 135.78 150.50 %change per annum 0698 4,25 2.22 1A.45 1.0 1.80 2.00 2.13 2.08 *Commodity price projectons as of May 4, 2000. **The World Bank pimary commodity pnce indices are computed based on 1987-89 export values in US dollars for low- and middle-income economies, rebased to 1990. Weights for the sub-group indices expressed as ra6os to the non-energy index are as follows in percent: agriculture 69.1, fertlizers 2.7, metals and minerals 28.2; beverages 16.9, food 29.4, raw materials 22.8; fats and oils 10.1, grains 6.9, other food 12.4; tmber 9.3 and other raw mterials 13.6. **-Computed from unrounded data and deflated by the MUV index -***Inflation indices for 2000-2010 are projectons as of March 3, 2000. MUV for 1998 is a preliminary estmate, and 1999 a projecton. Growth rates for years 1980, 1990, 1998, 2005 and 2010 refer to compound annual rate of change between adjacent end-point years; all others are annual growth rates from the previous year. *****Unit value index in US dollar terms of manufactures exported from the G-5 countries (France, Germany, Japan, UK, and US) weighted proportonally to the countries' exports to the developing countries Source: World Bank, Development Prospects Group; Historical US GDP deflator: US Department of Commerce. 82 GLOBAL COMMODITY MARKETS TECHNICAL NOTES Description of Price Series Alumiinum (LME) London Metal Exchange, unalloyed pri- DAP (diammonium phosphate), bulk, spot, Lo.b. US Gulf mary ingots, high grade, minimum 99.7% purity, cash price Fishmeal (any origin), 64-65%/u, c&f Hamburg, nfs Bananas (Central & South American), major brands, c.i.f. Hamburg Gold (UK), 99.5% fine, London afternoon fixing, average of daily rates Bananas (Central & South Arnerican), major btands, US import price, free on truck (fo.t.) US ports Groundnut oil (any origin), c.i.f. Rotterdam Beef (Australian/New Zealand), cow forequarters, frozen Iron ore (Brazilian), Companhia Vale do Rio Doce (CVRD) boneless, 85% chemical lean, c.i.f U.S. port (East Coast), ex- Carajas fines, 67.35% Fe (iron) content (dry weight) ores, mois- dock ture content 8.0%, contract price to Europe, fo.b. Ponta da Madeira. Unit dry metric ton unit (dmtu) stands for mt 1 %/o Fe- Coal (Australian), thermal, 12,000 btu/lb, less than 1.0% unit. To convert price in cents/dmtu to $/dmt SSF (dry ore), sulfur, 14% ash, fLo.b. piers, Newcastle/Port Kembla multiply by percent Fe content. Coal (US), thermal, 12,000 btu/lb, less than 1.0% sulfur, 12% Jute (Bangladesh), raw, white D, fo.b. Chittagong/ Chalna ash, Lab. piers, Hampton Road/Norfolk Larnb (New Zealand), frozen whole carcasses, wholesale price, Cocoa (ICCO), International Cocoa Organization daily price, Smithfield market, London average of the first three positions on the terminal markets of New York and London, nearest three future trading months Lead (LME), refined, 99.970/u purity, settlement price Coconut oil (Philippines/Indonesian), bulk, c.i.f. Rotterdam Logs (West African), sapele, high quality (loyal and marchand LM1), f.o.b. Cameroon; beginning January 1996, LM 80 centi- Coffee (ICO), International Coffee Organization indicator meter or more price, other mild Arabicas, average New York and Bremen/ Hamburg markets, ex-dock Logs (Malaysian), meranti, Sarawak, sale price charged by im- porters, Tokyo; prior to February 1993, average of Sabab and Coffee (ICO), International Coffee Organization indicator Sarawak weighted byJapanese import volumes price, Robustas, average New York and Le Havre/Marseilles markets, ex-dock Maize (US), no. 2, yellow, fo.b. US Gulf ports Copper (LME), grade A, mininmum 99.9935%./o purity, cath- Natural Gas (Europe), average import border price odes and wire bar shapes, settlement price Natural Gas (U.S.), spot price at Henry Hub, Louisiana Copra (Philippines/Indonesian), bulk, c.i.f. N.W Europe Nickel (LME), cathodes, minimum 99.8% purity, official Cotton ("cotton outlook", "A" index), middling 1-3/32 inch, morning session, weekly average bid/ asked price average of the cheapest 5 of 15 styles traded in Northern Eu- rope, c.i.f. Oranges (Mediterranean exporters) navel, EEC indicative import price, c.i.f. Paris Cotton (US), Memphis/Eastern, middling 1-3/32 inch, c.i.f. Northern Europe, one of the 15 styles based on which the Palm oil (Malaysian), 5% bulk, c.i.f. N. W. Europe Cotlook A Index is computed Palmkernel Oil (Malaysian), c.i.f. Rotterdam Crude oil (spot), average spot price of Brent, Dubai and NWVest Texas Intermediate, equally weighed Phosphate rock (Moroccan), 70% BPL, contract, f.a.s. Casablanca Crude oil (spot), U.K. Brent 38' API, fo.b. U.K ports Plywood (African and Southeast Asian), Lauan, 3-ply, extra, Crude oil (spot), Dubai Fateh 32' API, fLo.b. Dubai 91 cum x 182 cum x 4 mm, wholesale price, spot Tokyo Crude oil (spot), WVest Texas Intermediate (WTI) 40' API, Potassium chloride (muriate of potash), standard grade, Lo.b. Midland Texas spot, fo.b. Vancouver ap ril 2000 83 TECHNICAL NOTES Description of Price Series (continued) Rice (Thai), 5% broken, WR, milled, indicative price based on tion (volume of deliveries) at Germany, Japan and the United weekly surveys of export transactions (indicative survey price), States. The eight products are as follow: rebar (concrete reinforc- government standard, £o.b. Bangkok ing bars), merch bar (merchant bars),wire rod, section (H--shape), plate (medium), hot rolled coil/sheet, cold rolled coil/sheet, and Rice (Thai), 25% broken, WR, milled indicative survey price, galvanized iron sheet government standard, fo.b. Bangkok Sugar (EU), European Union negotiated import price for raw Rice (Thai), 35% broken, WR, milled, indicativc survey pricc, unpacked sugar from African, Caribbean and Pacific (ACP) un- government standard, fo.b. Bangkok der Lome Conventions, c.i.f. European ports Rice (Thai), 100% broken, A.1 Special, broken kernel ob- Sugar (US), import price, nearest future, c.i.f. New York tained from the milling of WR 15%,20%, and 25%, indicative pricc, government standard, fo.b. Bangkok Sugar (world), International Sugar Agreement (ISA) daily price, raw, fo.b. and stowed at greater Caribbean ports Rubber (Malaysian), RSS no. 1, in bales, Malaysian Rubber Exchange & Licensing Board, midday buyers' asking price for Tea (Average three auctions), arithmetic average of quota- prompt or 30 days delivery, fo.b. Kuala Lumpur tions at Calcutta, Colombo and Mombasa/Nairobi Rubber (any origin), RSS no. 1, in bales, Rubber Traders Tea (Calcutta auctions), leaf, include excise duty, arithmetic Association (RTA), spot, New York averages of weekly quotes Rubber (Asian), RSS no. 1, in bales, Rubber Association of Tea (Colombo auctions), Sri Lankan origin, all tea, arithmetic Singapore Commodity Exchange (RASCE)/ Singapore Com- averages of weekly quotes modity Exchange, midday buyers' asking price for prompt or 30 days delivery; prior to June 1992, spot, Singapore Tea (Mombassa/Nairobi auctions), African origin, all tea, arithmetic averages of weekly quotes Sawnwood (Cameroonian), sapele, width 6 inches or more, length 6 feet or more, f.a.s. Cameroonian ports Tin (LME), refined, 99.85% purity, settlement price Sawnwood (Malaysian), dark red scraya/mcranti, select and TSP (triple super-phosphate), bulk, spot, fLo.b. US Gulf better quality, General Market Specification (GMS), width 6 inches or more, average 7 to 8 inches; length 8 inches or more, Urea, (varying origins), bagged, spot, Lo.b. Eastern Europe average 12 to 14 inches; thickness 1 to 2 inch(es); kiln dry, c. & f UK ports Urea, (varying origins), bulk, spot, f.o.b. Eastern Europe Shrimp (Mexican), west coast, frozen, white, No. 1, shell-on, Wheat (Canadian), no. I, Western Red Spring (CWRS), in headless, 26/30 count per pound, wholesale price at New York store, St. Lawrence, export price Silver (Handy & Harman), 99.9% grade refined, New York Wheat (US), no. 1, hard red winter, ordinary protein, export price delivered at the Gulf port for prompt or 30 days ship- Sisal (EastAfrican), UG (rejects), c.i.f. UK ment Sorghum (US), no. 2 milo yellow, fo.b. Gulf ports Wheat (US), no.2, soft red winter, export price delivered at the Gulf port for prompt or 30 days shipment Soybean meal (any origin), Argentine 45/46% extraction, c.i.f. Rotterdam; prior to 1990, US 44% Woodpulp (Swedish), softwood, sulfate, bleached, air-dry weight, c.i.£ North Sea ports Soybean oil (Dutch), crude, fo.b. ex-mill Wool (Australian), merino, 64's, clean, c.i.f. UK Soybeans (US), c.i.£ Rotterdam Zinc (LME), special high grade, minimum 99.995% purity, Steel products price index, 1990=100, Japanese), composite weekly average bid/asked price, official morning session; price index for eight selected steel products based on quotations prior to April 1990, high grade, minimum 99.95% purity, fo.b. Japan excluding shipments to the United States and China, settlement price weighted by product shares of apparent combined consump- 84 GLOBAL COMMODITY MARKETS TECHNICAL NOTES Definitions and Explanations Annual growth rates are calculated by least squares units as the monthly data for comparison purposes, regressions for the three sub-periods (1970-80, 1980- however they are not adjusted for quality or transporta- 90, 1990-most recent figure). Because the selection of tion. Thus, the futures prices will often have a signifi- breaks is admittedly ad hoc, in the sense that it is based cant margin from the actual monthly prices, but this solely on the fact that 1980 and 1990 represent the margin should not be interpreted as the expected direc- beginning and the end of their respective decades, the tion of future price movements. Rather, it is the path break points are introduced in the estimation process of futures prices which is considered to have economic through a kinked growth model. This model imposes meaning. the restriction that the three growth lines intersect at 1980 and 1990, which implies that one sub-period's Price indexes were computed by the Laspeyres for- observations will affect the growth rates of the other mula. The Non-Energy Price Index is comprised of sub-periods. The growth rates are updated in each 33 commodities. U.S. dollar prices of each commodity January issue of this report. The full results and de- are weighted by 1987-89 average export values. Base tails about the methodology can be found in a forth- year reference for all indexes is 1990. Countries com- coming paper "Unit Roots Versus Trend Stationarity prised of all low and middle income economies ac- in Growth Rate Estimation," which will also be avail- cording to World Bank income classification. Details able on our GCM web site. are shown in Table Al Commodity Price Data. Constant prices are prices which are deflated by the Regions are classified according to the World Bank's Manufactures Unit Value Index (MUV), with a base of analytical groupings. 1990=100. The MUV is the unit value index in US dollar terms of manufactures exported from the G-5 Reporting period. Calendar vs. crop or marketing countries (France, Germany, Japan, UK, and US), year refers to the span of the year. It is common in weighted proportionally to the countries' exports to the many agricultural commodities to refer to production developing countries. and other variables over the twelve month period which begins with harvest. A crop or marketing year will of- Dollars are US dollars unless otherwise specified. ten differ by commodity and, in some cases, by country or region. Commodities such as metals use calendar Futures prices shown in this report are end of quarter year. closing prices. The prices are converted to the same Tons refer to metric tons (1,000 kilograms). april 2000 85 TECHNICAL NOTES Acronyms and Abbreviations ACP African, Caribbean, and Pacific States KLCE Kuala Lumpur Commodity Exchange API American Petroleum Institute kt thousand ton bbl barrel lb pound BP British Petroleum LIBOR London Interbank Offer Rate Bel-Lux Belgium/Luxemburg LIFFE London International Financial and Futures and Op- c.i.f. cost, insurance, and freight tions Exchange CBOT Chicago Board of Trade LME London Metal Exchange CSCE Coffee, Sugar, and Cocoa Exchange mnb/d million barrels per day cum cubic meter MGE Minneapolis Grain Exchange CVRD Companhia Vale do Rio Doce mrnbtu millions of British thermal units dmtu dry metric ton unit mt metric ton dwt dead weight ton mtoe million tons of oil equivalent EU European Union MUV Manufactures unit value ECE Economic Commission for Europe n.a. data not available f.o.b. free on board NIKKEI Nihon Keizai Shimbun, Inc. f.o.r. free on rail niL data less than half the unit shown £o.t. free on truck NMFS The National Marine Fisheries Service FAO Food and Agriculture Organization of the NYBOT New York Board of Trade (the parent company of United Nations CSCE and NYCE) FSU Former Soviet Union NYCE New York Cotton Exchange G-5 France, GermanyJapan, United Kingdom, and NYMEX New York Mercantile Exchange United States OECD Organization for Economic Cooperation and Devel- G-7 G-5 plus Canada and Italy opment GATT General Agreement on Tariffs and Trade OPEC Organization of Petroleum Exporting Countries GDP Gross domestic product QR Quantitative Restrictions GNP Gross national product PNG Papua New Guinea ha hectare SDR Special drawing right ICAC International Cotton Advisory Committee SICOM Singapore Commodity Exchange ICCO International Cocoa Organization ton metric ton ICO International Coffee Organization TRQ Tariff Rate Quotas IEA International Energy Agency UAE United Arab Emirates IGC International Grains Council IJN United Nations IISI International Iron and Steel Institute UNCTAD United Nations Conference on Trade and Development IMF International Monetary Fund US DOE US Department of Energy INRO International Natural Rubber Organization USDA US Department of Agriculture IRSG International Rubber Study Group WBMS World Bureau of Metal Statistics ISO International Sugar Organization WFP World Food Programme ITC International Tea Committee WHO World Health Organization ITTO International Tropical Timber Organization WSJ The Wall StreetJournal kg kilogram WTO World Trade Organization 86 GLOBAL COMMODITY MARKETS THE WORLD BANK 1818 H Street, N.W Washington, D.C. 20433 USA Telephonie: 202-477-1234 Facsimile: 202-477-6391 Telex: MCI 64145 WORLDBANK MCI 248423 WORLDBANK Internet: www.worldbank.org Email: books(\vorldbank.org Global Comilmiodity Markets is published by the Commodities Team of the World Bank's Development Prospects Group. Each quarterly issue provides authoritative market reviews of 25 to 30 important commodities, price forecasts for more than 40 commodities, a feature article on the major issues affecting commodity markets, and current and recent prices for more than 80 primary commodities. Full-service subscribers receive a monthly electronic update and have access to the electronic edition, posted 10 to 15 days in advance of the mailing of the print copy. R0W L 8 N A G R 0 Our dream iso a6 world free of poverty A~~~~~~~~~~~~~~~~~~~~l~N 0-? F .,Q_