The resurgence in global demand and
world commodity prices from 2003 has since provided further impetus to resource - related investment.
The decline in earnings over the past year owes largely to a fall in Australian dollar prices, as the appreciation of the Australian dollar has more than offset
rising world commodity prices evident since mid last year (see section on commodity prices and the terms of trade below).
The behaviour of the Australian dollar exchange rate is one example; since it was floated in the early 1980s, the path it has followed has been very similar to that
of world commodity prices (Graph 2).
The positives are most clearly evident in the United States, where the Asian crisis, by contributing to a stronger US dollar and
falling world commodity prices, has helped to cap inflationary forces.
«The National Government and Fonterra's preoccupation with growth at all costs is making the dairy sector more vulnerable and less resilient to swings in
world commodity prices as well as drought and extreme weather events,» Sage said.
Fonterra, New Zealand's largest dairy co-operative,
predicted world commodity prices would continue rebounding strongly over the next few months as supply and demand tightened.
Upstream price pressures have also been boosted by the rise in oil prices, as well as the depreciation of the exchange rate and the increase
in world commodity prices; producer input and output prices have increased more sharply over the past six months than they have since the early 1990s.
Some might argue that while an appreciation of the Canadian dollar caused by
rising world commodity prices is an understandable and even desirable outcome, appreciations caused by international portfolio reallocations are artificial and should be avoided.
Conditions in the economy are tighter now than in the aftermath of the Asian crisis, the deflationary impulse from Asian producers is no longer present and
world commodity prices are rising.
Ongoing gains in
world commodity prices are also assisting growth in earnings by partially offsetting the dampening effect of the currency appreciation on Australian dollar export prices.
An appreciation of the exchange rate means that: the increase in the domestic currency price of commodity exports will be less than the increase in
world commodity prices; the income of the other tradable sector will fall; and real income gains flow to the broader economy via the associated decline in the price of imports.
The distribution of these real income gains across the economy depends, crucially, on how much the exchange rate appreciates in response to the positive shock to
world commodity prices (RBA 2005).
Ready reference to
world commodity prices is always there, because there is a world commodities market.
«So let's see now: how will a rural property trust go with low yields, subject to weather, labour,
world commodity prices and all the other difficulties of making money on the land?
The sale is part of Glencore's strategy to reduce its debt burden and restructure its business in the light of a slump in
world commodities prices.