• Oil Prices strengthen in Western Canada, as West Texas Intermediate (WTI) returns to world levels and discounts narrow
• Grain prices begin to unwind alongside record U.S. corn and world wheat crops expected this Fall, after last year's U.S. drought.  Large crops also likely on the Canadian Prairies
• Iron ore prices rally in northern China in July/August

TORONTO, Aug. 22, 2013 /CNW/ - Scotiabank's Commodity Price Index jumped by 4.1% month-over-month (m/m) in July. Despite considerable month-to-month volatility, the All Items Index has edged up by 1.2% year-to-date (YTD) over the previous seven months and is currently 6.3% above a year earlier.

"While it is too early to say that commodity prices have bottomed, the correction since April 2011 could be largely over later this year," said Patricia Mohr, Scotiabank's Vice President of Economics and Commodity Market Specialist. "The downturn since the Spring of 2011 has been linked to an austerity-led recession in the southern euro zone, a sub-par U.S. economic recovery and new mine supply coming on stream in a lacklustre global economy. The euro zone's real GDP rose by 1.1% annualized in 2013:Q2, ending six consecutive quarters of contraction, and signs point to a moderate pick-up in the United States."

Highlights in the report include:

• Western Canadian Select (WCS) heavy oil prices climbed from US$75 to more than US$90 per barrel in July - the highest level since mid-2008, when West Texas Intermediate (WTI) oil prices were at a record (US$147.90) - just prior to the economic downturn in 2008-09. WCS heavy oil prices will remain at the US$90 mark in August (closer to the 'world' price for heavy crude and its true, inherent value).
• Grain and oilseed prices are unwinding from the spike of last summer, caused by a drought in the U.S. Midwest.  After soaring to record highs in August and September 2012, more favourable weather this growing season looks likely to yield a record U.S. corn crop and a large U.S. soybean harvest, sending prices markedly lower. The canola harvest in Western Canada could also be a record.
• Spot iron ore prices (62% Fe) delivered to northern China - indicative of prices paid for Labrador ore - rebounded to US$127.50 per tonne in July, from a near-term low of US$115 in June. China's steel production has increased by 7.4% YTD and now accounts for 49% of the world total.

Read the full Scotiabank Commodity Price Index at http://www.scotiabank.com/ca/en/0,,3112,00.html.

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SOURCE Scotiabank - Economic Reports