Commodity prices – supply and demand in action.

commoditiesThe Economist has a graph showing the change in price of commodities from 5th January 2016 to 18th October 2016. The change in price is purely reflected in simple supply and demand theory. In 2015 raw material price dropped mainly because of over-supply. The main points from the graph are:

  • Oil – $50 per barrel – expectations that supply might decrease by OPEC countries
  • Sugar – price up by 56% – unfavorable weather therefore supply decreases
  • Grain – prices down by 9% – bumper harvests in the USA
  • Beef – prices down by 24% – oversupply of beef

 

 

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