For a second consecutive month, Scotiabank's Commodity Price Index declined month-over-month by 6.8%.
The index, which measures price trends in 32 of Canada's major exports, is still 24.5% higher than prices a year ago in September 2007. But, with declines in global economic prospects, and much tighter global credit conditions, prices are expected to drop further.
Scotiabank cited the unwinding of futures and commodity-index investment positions by hedge funds as a main reason for the decline. Investment in commodity index-linked securities fell from about US$200 billion at the end of June to US$150 billion in September and is expected to continue falling.
The decline in September was led by the oil and gas index, which declined 10.6%. The agricultural sub-index fell 8.9%.