LONDON: Commodity prices just slumped to their lowest level since the end of the 20th century, according to a widely-used Bloomberg index.
The index is made up of 22 major traded commodities and has been sliding recently, but the chaos in Asian markets hit prices particularly hard on Monday.
Commodity prices hit their post-crisis peak in early 2011, and have generally been sliding since then — they’re now all the way to where they were in 1999, before the 2000s commodities boom began.
There’s a mixture of good news and bad news explaining why the prices are plunging. Part of the story is a surge in supply, for example in oil. The world’s major producers have made a concerted effort to slow the advance of American oil production by increasing the supply and therefore reducing the price. That’s good news (so long as you don’t own any oil rigs).
The bad news reason is that part of the explanation is falling demand, and the falling expectation of future demand, particularly from China. That’ll also reduce prices, since exporters expect fewer buyers for their products.
