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Recent Surge in Global Commodity Prices

Impact of financialization of commodities and globally accommodative monetary conditions

March 2011
Yasunari Inamura, Tomonori Kimata, Takeshi Kimura, Takashi Muto
International Department

Global commodity prices have been rising again since 2009, and particularly rapidly since the fall of 2010. While the strong increase in commodity prices has been driven by global economic growth propelled by emerging economies, speculative investment flows into commodity markets have amplified the intensity of the price surge. The dynamics of global commodity prices has been changing as well, in accordance with the growing presence of financial investors in commodity markets. The entry of new financial investors has paved the way for the "financialization of commodities". Consequently, global commodity markets have become more sensitive to portfolio rebalancing by financial investors, which has made commodity markets more correlated with other asset markets, including major equity markets. Furthermore, globally accommodative monetary conditions have played an important role in the surge in commodity prices, both by stimulating physical demand for commodities and driving more investment flows into financialized commodity markets.


Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2011-E-2, is a translation of the original Japanese version, 2011-J-2 published in March 2011.

If you have any comments and questions on this Review, please contact Takeshi Kimura (E-mail: