World Commodity Prices: Data and Research

Paul Cashin and Ximena Cheetham

About 25 percent of world merchandise trade consists of primary commodities. Both long-term trends and short-term fluctuations in commodity prices are, therefore, key determinants of developments in the world economy. Indeed, many developing countries continue to rely on a few commodities for the bulk of their export earnings and fiscal revenue. Commodity price fluctuations (particularly in fuel and energy) can also transmit business cycle disturbances across countries and can affect national rates of inflation.

The IMF’s Research Department maintains a database of spot prices for about 80 primary commodities, with annual, quarterly, and monthly prices. The commodities covered include items in the general categories of food, beverages, agricultural raw materials, metals, fertilizers, and energy. This database, IMF Primary Commodity Prices, is updated monthly and is available in table format (for the period from 1990 on) at http://www.imf.org/external/np/res/commod/index.asp and through the monthly publication, International Financial Statistics.

In addition, price baselines for nonfuel primary commodities—some 35 series are included in the IMF’s aggregate index—are prepared by the Research Department in collaboration with the World Bank. These detailed baselines, generated for internal use, provide a common basis for the short- and medium-term projection of export earnings and import expenditures in the balance of payments work of the IMF and the World Bank. Aggregate price indices derived from the baselines for individual nonfuel commodities are published in the IMF’s World Economic Outlook and in the World Bank’s World Development Report.

IMF research on commodity prices has focused on understanding the stylized facts of commodity-price movements. The cyclical properties of commodity-price cycles have been examined, with the broad finding that price slumps last longer than price booms, but that prices typically rise faster in short-lived booms than in long-lived slumps.¹ Moreover, while there are small, long-run, downward trends in real commodity prices, this trend movement is of little practical policy relevance as it is small when compared with the large variability of commodity prices² Shocks to commodity prices are also typically long lasting, which is important information for policymakers seeking to design institutional arrangements to ameliorate the economic effects of such shocks.³ In addition, there is little evidence to support the hypothesis that the prices of unrelated commodities move together on world commodity markets.⁴ The macroeconomic determinants of the behavior of nonoil commodity prices have also been examined, as have the important effects of climate variability on world commodity prices and economic activity.⁵ Finally, given the importance of oil to the world economy, IMF research has also focused on the economic effects of oil price shocks, and on factors influencing the volatility of world oil prices.⁶