Commodity prices will continue to fall during 2009 and buyers should be wary about signing long-term contracts, according to a leading economist.
Julian Jessop, chief international economist at London-based research consultancy Capital Economics, said that unlike some forecasters he saw no quick rebound for oil, metals, foodstuffs and other raw material prices.
The “very substantial correction” of recent months was set to continue into next year, he said.
“I wouldn’t listen to anybody who says you should lock in prices now,” advised Jessop, speaking at the ProcureCon 2008 event in Geneva. “I’m pretty confident that all the major commodity prices will be lower in the next 6-12 months.”
He added: “If you’ve got power [with commodity suppliers] you should use it.”
Jessop argued that lower demand for oil and other raw materials in developing economies such as China and Saudi Arabia was the main reason prices would continue their downward trend.