Commodity prices on the Scotiabank Commodity Price Index slipped back down again in February after registering growth in early 2013.
The index shows that commodity prices fell 0.9 per cent month-over-month in February, as slowing economic growth in China and uncertainty over events in Cyprus put a damper on markets.
A few bright spots are the robust strengthening of lumber and oriented strandboard (OSB) prices and anticipation of improved prices for zinc by mid-decade.
Commodity prices had been on an upswing in the first weeks of February but fell back after China's Lunar New Year holiday as economic indicators out of that country were mixed. So-called risk-aversion to financial developments in Cyprus also played a role, according to the report.
Oil and gas led the decline as the price discount on Western Canadian Select heavy oil – compared with West Texas Intermediate crude – widened to an "enormous" $36.94 (U.S.) a barrel from an already high $32.84.
The gap dragged down WCS prices to $58.38 from $62.
The index points out that discounts on both heavy and light oil have recently narrowed on U.S. refineries' return from seasonal maintenance .
"The 'opportunity cost' to the Canadian economy of these wide price discounts off WTI around the turn of the year was enormous – caused largely by inadequate pipeline export capacity at a time of record Canadian oil production and an over-reliance on one key export market – U.S. Midwest refineries," says the report.
Metals and minerals edged 0.5 per cent lower in February as spot prices for potash at the Port of Vancouver eased to $410 per tonne in January from $424.
Gold, too, fell, to $1,628 per ounce in February from $1,671 in January.
Forest products continued their upward momentum in February with a 0.3 per cent increase. Western Spruce-Pine-Fir 2X4 lumber prices rose to $408 mid-month – a 45 per cent year-over-year increase – and OSB reached $430, a 100 per cent year-over-year rise.
Agricultural prices picked up by 1.9 per cent in February over the previous month.
"The All Items Index remains 17.2% below the April 2011 near-term peak, just prior to the advent of concern over excessive Euro zone sovereign debt and the negative fallout on global trade, said Patricia Mohr, vice president of economics and commodity markets specialist at Bank of Nova Scotia.