Commoedities have soared in price over the past 10 years. Are we set for the same volatility in the next 10, asks Mintec's Robert Mills


The noughties were a decade of up and ups for the main commodity markets that is. The inexorable rise of China and the weakness of the pound have played a huge role in driving prices skywards and it would appear we are in for more of the same in the next 10 years.

Over the past decade, in terms of sterling, the price of crude oil has gone up 270% while gas prices have risen 225%.

Despite the growing interest in biofuels as an alternative to precious crude, vegetable oil prices were actually more subdued. Soya oil rose 165%, rapeseed oil was up 163%, palm oil rose 152% and sunflower oil climbed 136%.

Tracking the price of ethanol is slightly less easy. The idea of ethanol as a commodity was less in vogue in the year 2000, however in Brazil, where they have been using ethanol for fuel for many years, the actual increase, in sterling terms, has only been about 150%.

The greatest risers over the last 10 years are ingredients such as sugar (with the world price up 317%) and cocoa ( up 300%). Showing recent, substantial rises, the price of tea actually went up by 70% over the same period, while coffee rose by a more modest 20%. Frozen concentrated orange juice experienced a more pedestrian 12% rise in price.

Staples such as wheat rose 37% and potatoes 72%, while chicken is up 31%, beef 54% and pork 72%. In real terms and compared to crude oil, none of these price rises seem particularly high.

While on the whole, the basic price of raw materials, in terms of sterling, has tended to rise since January 2000, this has not taken place in a relentless upward pattern.

There have been many times in the past 10 years when prices spiked only to drop back in a cyclical way.

And for those with an eye for better investments than food commodities, gold hasn't been so bad, rising 289%. Other metals show markedly different price rises, such as aluminium (+49%), zinc (+123%), and copper (311%).

There is precious little that is down except for the exchange rate of the pound, down 29% against the euro. The pound is worth that much less today than it was back in January 2000.

The 1990s can be considered to have been a "cheap" decade, whereas the past few years especially have been a time of particularly high volatility in the main commodity markets.

As for the future, spotting the trends of the next 10 years is likely to be pretty fraught. Maybe we are likely to see increasing volatility as well as the same periodic waves of speculation. If the past 10 days are anything to go by, bread, milk and maybe even salt may be the ones to watch.

But then commodities are just as unpredictable as the weather, so maybe it makes sense to watch for the long-term trends and take such predictions with more than just a pinch of salt?

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