Globalization affecting commodities: supply and demand in action
With commodities hitting a record high in March, refer to this article, the highest level since 1965 when the Bank of Montreal (BMO) started tracking commodity prices indicates to investers a peak in the price surge. What would make commodity prices drop well according to BMO, “In 2006, rising production and slower global economic growth should result in generally lower prices”. This is because of global economic growth, which should relieve any tightness that exists currently in current commodity markets. An example of this globalization is the rising of India’s commodity markets, refer to this article, According to the National Commodity and Derivatives Exchange (NCDEX) started a promising note with the Indian government in order to strengthen the Indian Forward Markets Commission (FMC) to nurture, regulate, and control the Indian commodities futures market. This recognition of derivatives trading as a specialized activity and not a pure speculative activity in India has enhanced the respectability of the entire industry before the investor class. The investor class is expected to give a boost in the trading volumes at commodity exchanges. And as the Global market is introduced to other commodities markets naturedly the commodity prices will decline.