Countries that export commodities should prepare for lower prices, according to the International Monetary Fund (IMF).
In its World Economic Outlook report, the IMF said that weaker global economic activity and lower demand would lead to lower prices for commodities, particularly from emerging countries.
The report said: “Given weak global activity and heightened downside risks to the near-term outlook, commodity exporters may be in for a downturn.
“If downside risks to global economic growth materialise, there could be even greater challenges facing commodity exporters, most of which are emerging and developing economies.”
It warned that baseline projections foresee a decline in commodity prices during 2012-13. It added: “Sizable downside risks to global growth also post risks of further downward adjustment in commodity prices.”
The report was published as a range of commodities suffered falls due to the re-emergence of the euro crisis, with fears emerging over Spanish and Italian bond auctions, a Greek general election in May that so far shows support disappearing for pro-austerity parties, and a French presidential election where the frontrunner Francois Hollande wants to re-negotiate the eurozone fiscal pact.
US crude oil dropped $1.44 yesterday to settle at $101.02, which was its lowest level since 14 February. Brent crude oil was down $2.79 to $119.88 a barrel – its lowest since 17 February.
Three month copper slumped yesterday to $8,024, which down to its lowest level since 16 January, although it picked up a little this morning to be $8,063 at 7:47am. This was below its 200-day moving average of $8,304.
Aluminium finished yesterday at $2,065 but pushed up a little this morning to $2,083.