Highlights

The general trend in commodity markets was down last week, will all sectors posting modest declines. The overall TDCI in U.S. dollars slid by 0.5%, while the index ex-energy was down by 0.8%. In Canadian dollar terms, the overall index managed to eke out a small increase of 0.1%, although the index ex-energy slid by 0.1%.

Crude oil prices sank 4% on the week, hitting an 8-week low of US$65 per barrel on Thursday. The drop stemmed largely from a bearish U.S. inventory report, which showed a 2.8 million barrel build, in contrast to market expectations for a 1.4 million barrel withdrawal. Gasoline and distillate inventories also grew by much more than anticipated. Some strength in the U.S. dollar also weighed on prices towards the end of the week.

Volatility continued to hit the natural gas market, as prices shot up by over 8% on the week. The fundamentals remain extremely weak - as evidenced by the U.S. storage report which showed that inventories are inching closer and closer to full capacity - suggesting that financial inflows are driving the current rally. Natural gas prices are up by over 85% from the low hit earlier this month, though they remain below US$4 per MMBtu.

Uranium prices tumbled 5.6% last week, as suppliers dropped prices in order to stimulate more demand - which is currently highly discretionary and therefore very price sensitive. Also, the threat of the U.S. Department of Energy dumping inventory on the market has kept some buyers on the sidelines.

The hog market endured more pain last week as prices slid 4%, giving up about two thirds of the gains made over the past two weeks. Poor fundamentals kept prices under pressure, while the market was cautious as it awaited the USDA's release of the Quarterly Hogs and Pigs report, which failed to show the herd liquidation that is needed to balance the market.

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