By GREG ANSLEY
CANBERRA - Global commodity prices, especially for rural commodities, have moved far from very depressed levels but analysts are warning that further recovery may be slowed as world economic growth reaches a peak.
Strengthening commodity markets have picked up key rural exports and are still rising after an extended trough.
Continued market growth has been recorded in the latest Desdner Bank-National Farmers Federation (NFF) commodity index, which showed solid gains in terms of both the $A and International Monetary Fund special drawing rights (SDR).
But analysts have warned the end may be in sight.
New Australian balance of trade figures for April also recorded a $A104 million seasonally adjusted fall in the value of rural exports, mainly due to slides in wheat and rice.
NFF economics policy director Todd Ritchie said this was unlikely to reflect directly a market downturn in April because there could be delays of up to two or three months in recording exports and the Bureau of Statistics figures would not include factors such as hedging contracts.
A more accurate picture of commodity price trends was provided by the Desdner-NFF index, which rose 4 per cent in $A terms in April - up 25.7 per cent on April 1999 - and 3.4 per cent in currency-neutral SDR terms.
In April, rural prices outperformed non-rural prices, with across-the-board gains including 4.9 per cent for wool, 2.4 per cent for cotton, 0.8 per cent for beef and 0.6 per cent for live sheep.
Desdner said gains in fibre prices continued to reflect higher oil prices, which pushed up the prices of synthetics, and had lifted wool prices 55 per cent above the low of October 1998.
Beef prices in $US terms were now back to October 1997 levels, and in $A terms were close to six-year highs.
The more subdued rise in the non-rural index was largely the result of gains in crude oil and petrol prices.
Desdner Kleinwort Benson analyst Rob Henderson said the sliding $A had boosted returns to farmers as many commodity exports were denominated in other currencies, and had helped increase volume sales.
Underlying prices were rising, the currency was falling, which assisted returns to producers, and sales denominated in $A were starting to look very cheap, he said.
Much of the recovery, however, was regaining lost ground.
What has happened in the past couple of months is that prices of rural commodities have caught up with non-rural commodities, so that now there was virtually no difference between the two sectors in year-on-year growth, said Mr Henderson.
Mr Ritchie said it was important to remember that some commodities had hit low levels: wool 18 months ago was at record lows and beef had fallen to reasonably low levels in $A terms and very low levels in $US terms.
Many of these commodities were due a price increase.
Beef was at pretty solid prices now and wool was starting to push up to moderate prices, but by and large this was recovery from previous lows and several factors, like high stock levels, mitigated against continued strong growth.
Commodity price surge likely to end
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