EDMONTON - It took BHP-Billiton's $38.6-billion US bid for Saskatchewan's Potash Corp. to reignite investor interest in fertilizer stocks.
But several other commodities are also heading higher, despite signs of a slowdown or even a possible double-dip recession south of the border.
How can that be?
For starters, commodity prices are driven by global forces -- including natural disasters such as droughts and floods -- and not just the health of the U.S. economy.
At the same time, a declining greenback typically pushes commodity values up, since they're priced in U.S. dollars.
Thus a U.S. economic slump could actually help boost prices for some staples.
The bottom line: commodities like copper, uranium, wheat, coking (metallurgical) coal, sulphur, newsprint, gold and barley are all showing signs of strength, even as Alberta's economic bellwethers -- oil and natural gas -- remain soft.
Here's a quick survey of the current outlook for several key commodities, courtesy of Patricia Mohr, Scotiabank's respected commodity expert:
Copper: Prices for this widely used industrial metal have rallied strongly in recent weeks, trading Monday at about $3.30 a pound in London, up from $2.95 in June.
Although economic growth in China is likely to slow from the second quarter's 10.3 per cent annual pace, demand for copper is rising.
"China's demand for refined copper will likely grow by 13 per cent in 2010 and another 8 to 10 per cent in 2011, after an extraordinary 28 per cent increase in 2009," says Mohr, in her latest report.
At the same time, global supplies are shrinking -- London's copper stocks are down 27 per cent since February -- with little new mine capacity added in recent years, and new operations not slated to ramp up until 2012.
"The net result (is) world supply/ demand conditions for copper are in 'deficit' in 2010, with the deficit likely to grow in 2011. The LME (London Metal Exchange) copper price forecast has been revised up to $3.20 (per pound) for 2010 and $3.35 for 2011," says Mohr.
Uranium: Spot prices for uranium, which spiked to a record high of $136 a pound in 2007, have also begun to lift after a sharp plunge in 2009.
Prices rose from just $40.75 a pound in mid-June to $46.50 by mid-August, Mohr notes, and term contract prices are also creeping up.
Although Mohr doesn't see a return to triple-digit prices any time soon -- her 2011 forecast calls for an average price of just $46, up from $44 this year -- the longer-term outlook is more bullish.
As countries like China, Saudi Arabia and the United Arab Emirates ramp up their nuclear power programs, demand for uranium will leap by 46 per cent over the next decade, predicts CRU, a London-based research firm. It expects a global shortage of uranium by 2013.
Wheat: Since it touched bottom in the spring, the Canadian Wheat Board's asking price for number-one grade export wheat jumped nearly $70 US per tonne or 26 per cent, reaching $334 in mid-August, notes Mohr.
She sees more upside ahead over the next six months.
The rebound reflects supply worries, including a ban on Russian wheat exports through Dec. 31 -- due to drought-induced crop failures -- plus reduced crops in Western Canada, Kazakhstan, Ukraine and Europe.
In addition, the EU recently reduced its estimate for global wheat stocks for 2010-2011, following two years of near-record supplies.
Canola and Barley: The devastating drought in Russia and Kazakhstan -- the worst in half a century -- and spring floods in Western Canada are also driving up prices for most grains and oilseeds, says Mohr.
Spot canola prices in Vancouver jumped nearly $50 or 11 per cent between June and mid-August to $482 per tonne, she notes.
Meanwhile, prices for barley, a major crop in Western Canada, are up on expectations of a double-digit decline in the Canadian harvest for 2010-2011, and the poorest Russian barley crop in four decades.
Newsprint: Although it doesn't get as much media play as it once did, the newsprint sector is also on a roll these days.
Eastern U.S. newsprint prices have surged from just $435 US per tonne in mid-2009 to $630 last month, an uptick of 45 per cent.
North American mills are running "flat out" says Mohr, at virtually 100 per cent of capacity, reflecting soaring exports to Asia -- up nearly 300 per cent versus a year ago -- and the impact of mill shutdowns and closures.
She expects newsprint prices to average $607 per tonne this year -- up from $560 in 2009 -- and $680 in 2011.
Among other forest products, Mohr also expects a gradual strengthening in prices for OSB (oriented stand board), lumber and linerboard, but she believes pulp prices will weaken in 2011, after rocketing higher during the first half of 2010.
