India, China major commodity players: UNCTAD

A United Nations report says India and China are emerging as the key players in global commodities trade.

The report from the United Nations Conference on Trade and Development said that commodity exchanges in India and China are becoming major players in global markets.

It said investment in commodities was very high in 2006 as soaring prices aroused the interest of investors and even speculators.

It also said that the global commodities markets are becoming more volatile due to greater participation of investors.

In its 'Trade and Development Report," the UN agency said: "Increased participation of financial investors in commodity investment has added an element of volatility to commodity markets."

"The growth in India, China and US provided the push for the strong demand for commodities," said pointed out: "commodities prices in total (except crude oil) increased by 89% in 2006

compared to their rates in the previous year."

Even though the magnitude of investments in commodities as a financial asset is difficult to measure, there are indications that it has been huge in recent years, the report pointed out.

"The outlook is for commodity prices to remain high for some years on account of solid demand for commodities in rapidly growing developing countries, even though global economic growth is expected to slow somewhat," it said.

But, the growth rate of commodity prices may slow down as new supplies enter the markets, it added. The report added that commodity prices continued to rise this year since February and it was still uncertain whether there would be an end to the trend as predicted by some analysts.

In 2006 and early this year, producers benefited from the boom in commodity markets which began in 2002.