Financial Turmoil Routs Commodities - BMO

    TORONTO, Oct. 16 /CNW/ - The BMO Capital Markets Commodity Price Index
fell 7.8 per cent in September to 207.9 (2003 = 100), with all commodity
groups suffering major losses.
    "While weakening global economic growth had already kick-started the
downtrend in commodity prices, intensifying financial market turmoil amplified
losses," according to Earl Sweet, Senior Economist, BMO Capital Markets. "Weak
and uncertain global economic conditions will restrain demand and pressure
prices through 2009. The weight of downward price pressure depends on how deep
and protracted the U.S. recession is and whether it seriously impairs economic
activity in other regions."
    Mr. Sweet noted that volatility will remain a notable market feature over
the next several months, amid uncertainty regarding the impact of financial
market mayhem on the global economy.
    The Oil & Gas Index continued to drop sharply in September and early
October. The intensification of financial market stress globally has increased
expectations of a deeper U.S. recession, economic downturns in Europe and
Japan, and significantly slower growth in emerging markets. Projections of
much slower demand growth have spurred sharp price declines for crude oil.
Natural gas has followed oil's downward spiral, with its own retreat
reinforced by a reasonably strong build-up of inventories prior to winter.
    Broad-based declines pushed the Metals & Minerals Index notably lower in
September. The weakness in precious metals was driven by a bottoming out and
moderate bounce in the U.S. dollar and the growing prospect of lower
inflation. Meanwhile, global economic weakness and the turmoil in financial
markets undercut base metal prices.
    The Forest Products Index dropped in September - its first pullback in
2008. Demand conditions for lumber and pulp remained soft in North America,
given the credit squeeze and weak economic conditions. Newsprint prices
continued to receive support from capacity reductions.
    The Agricultural Index continued to move lower as an ever-improving
global production outlook, pressure from ongoing harvests, and retreating
investors worked against grains and oilseeds. Hog prices fell on ample animal
and meat supplies in North America and weaker export demand.

    BMO Capital Markets Commodity Index for September 2008
                       September 2008 Level           Per cent change
                     (2003 = 100)   from month ago  from year ago
    All Commodities            207.9                -7.8            16.5
    Oil & Gas                  234.8                -9.8            28.8
    Metals & Minerals          268.0                -5.0             2.5
    Forest Products            119.7                -4.0            11.5
    Agriculture                169.6               -12.7             4.3

    The full report, The Goods: A Monthly Commodity Watch for September 2008,
is available at

For further information:

For further information: Peter Scott, Toronto,,
(416) 867-3996; Internet:

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