Potash Shipments to China and Brazil Surge
WCS Heavy Oil Prices Improve
U.S. Pipeline Developments Have Positive Implications for Canada's Oil
TORONTO, June 24, 2013 /CNW/ - After edging down in April, amid a sharp
mid-month correction in gold prices, Scotiabank's Commodity Price Index
rebounded sharply in May, climbing 2.3% month-over-month (m/m).
"Scotiabank's Commodity Price Index has inched up this year and is now
1.9% above a year earlier," said Patricia Mohr, Scotiabank's Vice
President of Economics and Commodity Market Specialist. "The decline in
commodity prices from the April 2011 near-term peak - just prior to the
negative economic fallout from excessive euro zone sovereign debt - has
narrowed to -14.2% from -19.9% in late 2012."
However global commodity prices - as well as bond and equity markets -
have come under renewed pressure from Ben Bernanke. The Federal Reserve
Chairman has indicated that a stronger U.S. economy may lead the Fed to
withdraw some of its bond purchase program by late 2013, possibly
ending quantitative easing by my mid-2014. A backup in longer-dated
interest rates in recent weeks has triggered a stronger U.S. dollar,
creating headwinds for many dollar-denominated commodity prices. A
shortage of liquidity in China's banking system also unnerved commodity
markets last week.
Highlights in the report include:
China's potash imports jumped by almost 19% from January to April 2013
to 2.67 million metric tonnes (mt) compared with 2.25 mt a year
earlier. Brazilian imports have surged to 2.2 mt so far this year - up
53% year over year (yr/yr) - with buyers taking advantage of lower
potash prices and incented by still high grain prices.
Western Canadian Select heavy oil prices (WCS) climbed from US$69 per
barrel in April to US$80.90 in May, the highest level in 15 months.
West Texas Intermediate oil prices (WTI) only inched up from US$92 to
US$94.80 per barrel, but the WCS discount off WTI narrowed
substantially by almost US$10 to US$13.90.
Expansion of the Enbridge and Enterprise Partners LP Seaway Pipeline,
from Cushing to Texas, from 150,000 barrels per day (b/d) earlier this
year to its current operating rate of 321,000 b/d, has allowed more
crude oil to flow from Cushing, Oklahoma to refineries in the western
PADD III region, where international oil prices prevail. This has
contributed to a partial debottlenecking of the Cushing oil hub,
pulling WTI oil prices up closer to the Brent international benchmark.
Read the full Scotiabank Commodity Price Index at http://www.scotiabank.com/ca/en/0,,3112,00.html.
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shaping the outlook for Canada and the global economy, including
macroeconomic developments, currency and capital market trends,
commodity and industry performance, as well as monetary, fiscal and
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SOURCE: Scotiabank - Economic Reports
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