Price Volatility is Here to Stay
May 23, 2011-
By John Drzik
Japan’s nuclear crisis and unrest in the Middle East have triggered price spikes and supply disruptions in everything from oil to wheat and gold.
It is tempting to view these recent price swings as a temporary phenomenon. They are not. They are the new normal.
Changes in both supply and demand dynamics are likely to create a long period of sustained commodity price volatility, with significant downstream implications for many businesses.
There are a number of structural reasons for the sustained increase in commodity price volatility. Global demand for commodities will grow at a double-digit rate over the next decade because of population growth and economic development.