International commodity markets are under stress.

50. The developing countries were all too dependent on price fluctuations on the international commodity markets.

Another statistical limitation comes from the segmentation of commodity markets.

Recognizing also that structural changes in international commodity markets, particularly the increasing concentration in trade and distribution, constitute new challenges for commodity producers and exporters in developing countries,

3. Expresses the urgent need for supportive international policies to improve the functioning of commodity markets through efficient and transparent price formation mechanisms, including commodity exchanges, and through the use of commodity price risk management instruments

Recognizing that structural changes in international commodity markets, particularly the increasing concentration in trade and distribution, constitute new challenges for small farmers, commodity producers and exporters in developing countries,

2. Expresses the urgent need for supportive international policies and measures to improve the functioning of commodity markets through efficient and transparent price formation mechanisms, including commodity exchanges, and through the use of commodity price risk management instruments

The broader use of gross domestic product (GDP) and commodity price linked bonds in international markets would serve the same purpose.

Expresses the urgent need for supportive international policies to improve the functioning of commodity markets through, inter alia, improving the efficiency and transparency of price fixation mechanisms, including commodity exchanges and the use of commodity price risk management instruments

Oil is a fungible commodity, and markets clear at a common price.

2. Expresses the urgent need for supportive international policies and measures to improve the functioning of commodity markets through efficient and transparent price formation mechanisms, including commodity exchanges, and through the use of viable and effective commodity price risk management instruments

3. Recognizes that developed countries account for two thirds of non fuel commodity imports, and expresses the urgent need for supportive international policies and measures to improve the functioning of the commodity markets through efficient and transparent mechanisms, including commodity exchanges

Fourth, the commodity super cycle that helped Brazil, Russia, South Africa, and many other commodity exporting emerging markets may be over.

Diversification of commodities would reduce to some extent the vulnerability of many developing countries to fluctuations in commodity prices in international markets.

International commodity agreements or arrangements

They thus provide an important instrument for hedging price risks in commodity markets.

The current instability of global commodity markets and the sharp drop in commodity prices was thus a source of grave concern to those countries.

the increasing gap between world and domestic price in commodity markets over the past 25 years , World Bank Economic Review, vol. 12, No. 3 (1998), pp. 503 526) notes that since the 1970s, commodity prices have fallen in international markets at the same time that consumer prices have risen.

China s 4 trillion stimulus package, unveiled in November 2008, restored confidence in global commodity markets.

And emerging markets will suffer once the US contraction and global slowdown undermines commodity prices.

Commodity, currency and stock exchanges, as well as real estate markets, are being set up.

quot 13.38 The dominant feature of the world commodity economy in the early 1990s was the prevalence of low real prices for most commodities on international markets and a stagnation in commodity export earnings for many producing countries.

In recent decades, however, macroeconomic policy in most developing countries has become more pro cyclical , largely exacerbating the volatility of international financial markets and commodity prices.

While commodity prices are always more variable than those for manufactured goods and services, commodity markets over the last five years have seen extraordinary, almost unprecedented, volatility.

Commodity markets have continued to be depressed, and to be destabilized by changing demand and supply conditions.

quot Recognizing also the need for a better functioning of commodity markets and for stable and more predictable commodity prices through, among other things, avoiding excessive price fluctuations and searching for long term solutions to commodity problems,

At the international level, strategic information on commodity sectors enhances global transparency and improves commodity strategies and policies.

It is expected that rapid growth in developing countries in Asia, particularly China and India, will continue to bring dynamism to international commodity markets, resulting in the opening of a window of opportunity for developing countries to increase their earnings from commodity exports.

One of the dominant trends in agricultural commodity markets had been the tendency for countries to take steps unilaterally to offset effects of international price declines and price instability.

Improving access to international markets

Even those countries that were better prepared were made painfully aware of the after effects of crisis export markets collapsed, commodity prices fell, and credit markets seized up.

39. Weak commodity prices were generally the result of excess supplies and weak demand in many industrial country markets.

It is very difficult in commodity producing countries to get timely and relevant information on all aspects of international markets, such as prices, market structures and marketing chains, quality standards, international companies, outlets, technology and marketplaces.

(a) Recurrent publications Handbook of International Trade and Development Statistics (annual) Yearbook of International Commodity Statistics Commodity Price Bulletin (monthly) Tungsten Statistics (quarterly) Iron Ore Statistics (annual) International Tin Statistics (quarterly)

Other initiatives to monitor commodity markets include the development of Infoprix in Benin, a system to monitor 64 rural markets (including those for the 25 most important staple foods), and Fintrac in Kenya, to help 35,000 horticultural smallholders access the international market.

From a substantive viewpoint, these involved emphasizing, on the one hand, issues concerning risk management and futures markets, as a means to improving the functioning of commodity markets and on the other, issues of sustainable development and the relationship between commodity production and trade and the environment.

In India, the installation of price tickers in remote local markets has resulted in shrinking spreads between the spot prices of commodities in these local markets and commodity exchange prices.

Aid for trade is a crucial instrument for enabling commodity dependent developing countries to enjoy the benefits emerging in world markets.

Despite decades of government directed investment into its agricultural markets, many farmers remain excluded from effective participation in commodity supply chains.

7. Agenda 21 also deals with international commodity trade and trade diversification.

The prevailing commodity situation gave cause for concern and demanded international action.

As many economists, notably Jeffrey Frankel, have shown, prices on these markets are established by an auction like process as a result, commodity markets transmit the effects of monetary expansion particularly quickly.

The strong euro has helped insulate Europe from skyrocketing oil and commodity prices, which are priced in dollars on the world markets.

Some believe that the crisis was amplified by speculative trading in commodity futures, which have become an integral part of food markets.

In that context, great urgency was attached to resolving the question of commodity goods through better remuneration and better access to markets.